Q What is Production Management.

Discuss the objectives and importance of

Production management.
What is Production Management. Discuss the different factors and
objectives of Production Management.
Production management means planning,organising, directing and controlling of
production activities. Production management deals with converting raw materials into
finished goods or products. Production management also deals with decision-making
regarding the quality, quantity,cost, etc., of production. It applies management
principles to production.
Production management is a part of business management. It is also called "Production
Function." Production management is slowly being replaced by operations
management.
The main objective of production management is to produce goods and services of the
right quality, right quantity, at the right time and at minimum cost. It also tries to
improve the efficiency. An efficient organization can face competition effectively.
Production management ensures full or optimum utilization of available production
capacity.

The importance of production

management to the business firm:
1. Accomplishment of firm's objectives:
Production management helps the business
firm to achieve all its objectives. It
produces products, which satisfy the
customers' needs and wants. So, the firm
will increase its sales. This will help it to
achieve its objectives.
2. Reputation, Goodwill and Image:
Production management helps the firm to
satisfy its customers. This increases the
firms reputation, goodwill and image. A good image helps the firm to expand and
grow.
3. Helps to introduce new products: Production management helps to introduce new
products in the market. It conducts Research and development (R&D). This helps the
firm to develop newer and better quality products. These products are successful in the
market because they give full satisfaction to the customers.
4. Supports other functional areas: Production management supports other functional
areas in an organisation, such as marketing, finance, and personnel. The marketing
department will find it easier to sell good-quality products, and the finance department
will get more funds due to increase in sales. It will also get more loans and share
capital for expansion and modernisation. The personnel department will be able to
manage the human resources effectively due to the better performance of the
production department.
5. Helps to face competition: Production management helps the firm to face
competition in the market. This is because production management produces products
of right quantity, right quality, right price and at the right time. These products are
delivered to the customers as per their requirements.
6. Optimum utilisation of resources: Production management facilitates optimum
utilisation of resources such as manpower, machines, etc. So, the firm can meet its
capacity utilisation objective. This will bring higher returns to the organisation.
7. Minimises cost of production: Production management helps to minimise the cost of
production. It tries to maximise the output and minimise the inputs. This helps the firm
to achieve its cost reduction and efficiency objective.
8. Expansion of the firm: The Production management helps the firm to expand and
grow. This is because it tries to improve quality and reduce costs. This helps the firm
to earn higher profits. These profits help the firm to expand and grow.
The importance of production management to customers and society:
1. Higher standard of living: Production management conducts continuous research
and development (R&D). So they produce new and better varieties of products.People
use these products and enjoy a higher standard of living.
2. Generates employment: Production activities create many different job opportunities
in the country, either directly or indirectly. Direct employment is generated in the
production area, and indirect employment is generated in the supporting areas such as
marketing, finance, customer support, etc.
3. Improves quality and reduces cost: Production management improves the quality of
the products because of research and development. Because of large-scale production,
there are economies of large scale. This brings down the cost of production. So,
consumer prices also reduce.
4. Spread effect: Because of production, other sectors also expand. Companies making
spare parts will expand. The service sector such as banking, transport, communication,
insurance, BPO, etc. also expand. This spread effect offers more job opportunities and
boosts economy.
5. Creates utility: Production creates Form Utility. Consumers can get form utility in
the shape, size and designs of the product. Production also creates time utility, because
goods are available whenever consumers need it.
6. Boosts economy: Production management ensures optimum utilisation of resources
and effective production of goods and services. This leads to speedy economic growth
and well-being of the nation.
Factors Affecting Operation Management
1. Global Competition
2. Quality, Customer Service & Cost Challenges
3. Rapid Expansion of Advance Technologies
4. Social Responsibility Issues
Differentiate between production and operations management.

Q What is Purchasing. Discuss the functions and duties of a good purchase

officer.
What is purchasing. Discuss in detail the duties of a Purchase Manager.
What is Purchasing? Discuss the objectives and functions of Purchase
Manager.
Purchasing is the first phase of Materials Management. Purchasing means procurement
of goods and services from some external agencies. The object of purchase department
is to arrange the supply of materials, spare parts and services or semi-finished goods,
required by the organisation to produce the desired product, from some agency or
source outside the organisation.
The responsibilities of the purchase manager depend on the industry and the company.
Whether purchasing raw materials for manufacturing or working with manufacturers
to secure finished goods, their duties can be many and varied.
The duties of the purchasing manager can include but are not limited to:
• Determining order frequency.
• Evaluating different suppliers.
• Defining shipping requirements.
• Ensuring purchases meet the criteria of the company.
• Negotiating contracts.
• Discussing and defining prioritized criteria.
Q Discuss in detail the different methods of purchasing.
What are the different methods of purchasing? Discuss any two methods in
detail with its advantages and limitations. Discuss the different methods of
Purchasing
Methods of Purchasing
1. Purchasing by Requirement:
This method refers to those goods which are purchased only when needed and in
required quantity. The goods which are not regularly required are purchased in this
way. On the other hand it refers to the purchase of emergency goods. These goods are
not kept in store. Purchasing department must be in knowledge of the suppliers of such
goods so that these are purchased without loss of time.
2. Market Purchasing:
Market purchasing refers to buying goods for taking advantages of favourable market
situations. Purchases are not made to meet immediate needs but are acquired as per the
future requirements. This method will be useful if future needs are estimated
accurately and purchases are made whenever favourable market situations arise. The
market situation is constantly studied for forecasting price trends.
The advantages of this method are: lower purchase prices, more margin on finished
products due to lower material cost and saving in purchase expenses. This method
suffers from some limitations: losses in case of wrong judgment, fear of obsolescence,
higher storing expenses due to more purchases.
3. Speculative Purchasing:
Speculative purchasing refers to purchases at lower prices with a view to sell them at
higher prices in future. The attention in this method is to earn profits out of price rises
later on. The purchases are not made as per the production needs of the plant rather
these are far in excess of such requirements. A cloth mill may purchase cotton in the
market when prices are low with the attention of earning profits out of its sales when
prices go up.
Speculative purchasing should not be confused with market purchasing. The former is
done to earn profits out of future price rises where as the latter is concerned with
purchasing for own needs when favourable market situations exist. Though speculative
purchasing may result in profits but there are chances of prices going down in future,
fear of obsolescence and incurring higher storage costs.
4. Purchasing for Specific Future Period:
This method is used for the purchase of those goods which are regularly required.
These goods are needed in small quantity and chances of price fluctuations are
negligible. The needs for specific period are assessed and purchases made accordingly.
The requirements for such purchases may be assessed on the basis of past experience,
period for which supplies are needed, carrying cost of inventory etc.
5. Contract Purchasing:
In the words of Spriegel it is "the purchasing under contract, usually formal, of needed
materials, delivery of which is frequently spread over a period of time." Under this
method a specific quantity of materials is contracted to be purchased and delivery is
taken in future. Even though the goods are procured in future but the price and other
terms and conditions are fixed at the time of contract. This method may be useful
when price rises in future may be expected and material requirements for future may
be accurately estimated.
6. Scheduled Purchasing:
Under this method the suppliers are supplied a probable time schedule for material
requirements so that they are in a position to arrange these in time. An accurate
production schedule is prepared for estimating future material needs. The suppliers are
informed of probable needs and orders are sent accordingly. The schedule provided by
the purchaser to the vendor is not a contract. This is only a gentleman's agreement for
terms and conditions of purchases. The main objectives of this method are: minimum
inventory, prompt service. low prices, quality goods etc.
7. Group Purchasing of Small Items:
Sometimes a number of small items are required to be purchased. The prices of these
items are so small that costs of placing orders may be more than prices. In such
situations the buyer places order with a vendor for all these items. The purchase price
is agreed to be by adding some percentage of profit in the dealer's cost. This method
will be used only when dealer's records are open to inspection for determining his cost.
This type of purchasing reduces the cost of the buyer by eliminating much clerical
work.
8. Co-operative Purchasing:
Small industrial units may join to pool their requirements and then place bulk orders
with dealers. This will help them in availing rebates on large quantity purchases, cash
discounts and savings in transportation costs. After receiving the materials these are
divided among the member units. Co-operative purchasing helps small units in
availing the benefits of bulk purchasing.
Q Discuss in detail the scope of Production Management.
Scope of Production Management
Plant layout and material handling
(a) Plant layout describes how facilities are physically organized.
(b) Material handling refers to the transportation of materials from a storeroom to a
machine and from one machine to another throughout the production process.
Production Management
(a) Production control is a component of production management. The manager is
responsible for monitoring and managing the output.
(b) He must determine whether or not the actual production is carried out according
to the plan.
(c) He must determine any variances by comparing actual production to the
planned. Then, he makes the required corrections to these discrepancies.
Planning and controlling production ( P.P.C)
(a) P.P.C is the process of organizing the production in advance, determining the
precise path for each item, defining the starting and completion dates for each
item, and monitoring the progress of items as they are produced in accordance
with orders.
Maintenance Administration
(a) Maintenance involves looking after the design and types of machinery in
factories.
(b) This is crucial for machinery and equipment, which are crucial components of
the entire production process.
Process Design
(a) Making decisions on the whole process of transforming raw materials into final
items is what this involves.
Location of Facilities
 (b) As significant investments are made in buildings, land, and equipment,
choosing the right site is crucial.
Q Define Productions system. Explain how the concept of production system
helps in understanding of production and operations management?
A “Production System” is a system whose function is to transform an input into a
desired output
by means of a process (the production process) and of resources. The definition of a
production
system is thus based on four main elements: the input, the resources, the production
process and
the output. The production system has the following characteristics:
• Production is an organized activity, so every production system has an objective.
• The system transforms the various inputs (men, material,
machines,information,energy) to useful outputs (goods and/or services).
• Production system doesn’t oppose in isolation from the other organization system
such as marketing, finance etc.
• There exists a feedback about the activities which is essential to control and improve
system performance.
• The transformation process involves many activities and operation necessary to
change inputs to output. These operations and activities can be mechanical, chemical,
inspection and control, material handling operation etc.
Q Discuss in detail the different types of Production system with application and
advantages.
Discuss in detail the different types of Production System.
Explain different types of production system with suitable examples.
Differentiate between Job Production and Batch Production.
Distinguish in between the different types of production systems with
suitable examples.
Classification of Production System
Production systems can be classified as Job Shop, Batch, Mass and
Continuous Production systems.
JOB SHOP PRODUCTION
Job shop production are characterized by manufacturing of one or few quantity of
products designed and produced as per the specification of customers within prefixed
time and cost. The distinguishing feature of this is low volume and high variety of
products.
A job shop comprises of general purpose machines arranged into different
departments. Each job demands unique technological requirements, demands
processing on machines in a certain sequence.
Characteristics
The Job-shop production system is followed when there is:
 High variety of products and low volume.
 Use of general purpose machines and facilities.
 Highly skilled operators who can take up each job as a challenge because of
uniqueness.
 Large inventory of materials, tools, parts.
 Detailed planning is essential for sequencing the requirements of each product,
capacities for each work centre and order priorities.

Advantages
 Because of general purpose machines and facilities variety of products can be
produced.
 Operators will become more skilled and competent, as each job gives them
learning opportunities.
 Full potential of operators can be utilized.
 Opportunity exists for creative methods and innovative ideas.
Limitations
 Higher cost due to frequent set up changes.
 Higher level of inventory at all levels and hence higher inventory cost.
 Production planning is complicated.
  Larger space requirements.

BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society
(APICS) “as a form of manufacturing in which the job passes through the functional
departments in lots or batches and each lot may have a different routing.”It is
characterized by the manufacture of limited number of products produced at regular
intervals and stocked awaiting sales.
Characteristics
Batch production system is used under the following circumstances:
 When there is shorter production runs.
 When plant and machinery are flexible.
 When plant and machinery set up is used for the production of item in a batch
and change of set up is required for processing the next batch.
 When manufacturing lead time and cost are lower as compared to job order
production.
Advantages
 Better utilization of plant and machinery.
 Promotes functional specialization.
 Cost per unit is lower as compared to job order production.
 Lower investment in plant and machinery.
 Flexibility to accommodate and process number of products.
 Job satisfaction exists for operators.
Limitations
 Material handling is complex because of irregular and longer flows.
 Production planning and control is complex.
 Work in process inventory is higher compared to continuous production.
 Higher set up costs due to frequent changes in set up.

MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous process are called mass
production. This production system is justified by very large volume of production.
The machines are arranged in a line or product layout. Product and process
standardization exists and all outputs follow the same path.
Characteristics
Mass production is used under the following circumstances:
 Standardization of product and process sequence.
 Dedicated special purpose machines having higher production capacities and
output rates.
 Large volume of products.
  Shorter cycle time of production.
 Lower in process inventory.
 Perfectly balanced production lines.
 Flow of materials, components and parts is continuous and without any back
tracking.
 Production planning and control is easy.
 Material handling can be completely automatic.
Advantages
 Higher rate of production with reduced cycle time.
 Higher capacity utilization due to line balancing.
 Less skilled operators are required.
 Low process inventory.
 Manufacturing cost per unit is low.
Limitations
 Breakdown of one machine will stop an entire production line.
 Line layout needs major change with the changes in the product design.
 High investment in production facilities.
 The cycle time is determined by the slowest operation.

CONTINUOUS PRODUCTION
Production facilities are arranged as per the sequence of production operations from
the first operations to the finished product. The items are made to flow through the
sequence of operations through material handling devices such as conveyors, transfer
devices, etc.
Characteristics
Continuous production is used under the following circumstances:
 Dedicated plant and equipment with zero flexibility.
 Material handling is fully automated.
 Process follows a predetermined sequence of operations.
 Component materials cannot be readily identified with final product.
 Planning and scheduling is a routine action.
Advantages
 Standardization of product and process sequence.
 Higher rate of production with reduced cycle time.
 Higher capacity utilization due to line balancing.
 Manpower is not required for material handling as it is completely automatic.
 Person with limited skills can be used on the production line.
 Unit cost is lower due to high volume of production.
Limitations
 Flexibility to accommodate and process number of products does not exist.
 Very high investment for setting flow lines.
  Product differentiation is limited

Q Differentiate between Centralized and Decentralized stores.

In case of Centralized warehouse materials are storage in one area and deliver to the
production department from that area. On the other hand decentralized warehouse
means, warehouse are located besides production department. Each method has own
advantages and disadvantages.
Centralized Store: When an organization receives raw materials in one warehouse but
supplied the raw materials several production centres or departments and divisions is
called centralized store. When the management of the company is very strict regarding
the materials control, they follow central management.
Advantages of Centralized Store
 Better supervision could be possible due to its single location
 Materials are tightly controlled due to specific area
 Better layout can be made
 High technical skills maintained by store supervisor
 As stock are kept as low as possible , it has needed a lesser storage area
 Better facilities for stores audit
 Easier stock taking is possible
 Lower cost of insurance is required
Disadvantages of Centralized Store
 Due to frequent transport to production centre, departments and divisions , a
higher transport cost is incurred.
 Possibility of bottle neck in the flow of materials to production
 It has a greater risk of obsolescence
 Due to centralized store, production may be hampered due to delay material
supply.
Decentralized Store: Decentralized Store is the store where materials are received and
issued from the same place. A large group of company maintain decentralized store
nearer to its production centre so that they can avoid production disruption and
minimizes the carrying cost of inventory. Every production department purchase and
handle raw materials separately. Decentralized store is suitable where there is huge
materials movements and production.
Advantages of Decentralized Store
 Easy materials controlling and storing functions
 Materials handling can be quicker than centralized system
 Minimizes the chances of materials losses due to fire, carrying etc.
  Internal Transportation costs is not needed
 Materials handling costs can be saved
 Requirements of individual departments can be easily fulfilled
Disadvantages of Decentralized Store
 Supervision costs of materials are relatively higher.
 More space is required for individual departments.
 Investment amount is comparatively higher.
 Very chance of misappropriation of stock due to appropriate authority.
 As separate store ,additional staff is needed. Hence staffing costs will be higher.
Q What is PPC. Explain the relationship of PPC department with other
departments.
Production planning is a pre-production activity. It is the pre-determination of
manufacturing requirements such as manpower, materials, machines and
manufacturing process. Ray wild defines “Production planning is the determination,
acquisition and arrangement of all facilities necessary for future production of
products.” It represents the design of production system. Apart from planning the
resources, it is going to organize the production. Based on the estimated demand for
company’s products, it is going to establish the production programme to meet the
targets set using the various resources
Q What is MIS. Explain in detail the objectives and functions of MIS.
What are the sources and characteristics of MIS?
How is MIS used as a strategic tool in an organisation. What are the
obstacles and challenges for MIS in production systems?
MIS as Strategic Resource
 MIS helps in taking strategic, tactical and operational decisions. It is one of the
critical and important resource.
 It helps the management to understand cost, quality, price, technology,
productivity and product.
 It helps to smoothen the business process and thereby facilitate managing of
business operations.
 It helps to maintain the business standards like ISO, QS, CMMI, six sigma etc.
 It helps to be a head in the competition.
 It helps company in analysing their own SWOT.
 It also helps in maintaining its own profitability.
 It will help in taking new business decisions like new plans, new product, new
business line etc.
 It protects company from business cycles.
  It provides future direction to the organisations.
 It also provides the competitive edge.
There are three major challenges of MIS: high cost, training of employees and
maintenance cost. These are briefly discussed below:
1. High Cost
2. Training of Employee
3. Maintenance Cost
High Cost: Development of new computerized based information system is a problem
for the organization due to the cost factor and it creates problems because with the
change of time there is need of up-to-date of the information system.
Training of Employee: Employees should have the capacity of learning of the
information system with the changing competitive and business environment;
otherwise it will be difficult for the organization to stay in the market.
Maintenance Cost: Sometimes a problem arises due to server crash and website crash.
Sometimes it leads to the loss of information. So, maintenance cost is needed to tackle
the above problem.
Q What is MIS? Explain its Characteristics, Implementation and Evaluation.
MIS is an organized integration of hardware and software technologies, data,
processes, and human elements. It is a software system that focuses on the
management of information technology to provide efficient and effective strategic
decision making.
MIS Definition
Management Information System (MIS) is an integrated man/machine system for
providing information to hold up the operations, management and decision making
functions in an organization.
MIS has five major objectives which include:
o Data Capturing
o Processing of Data
o Storage
o Retrieval
o Dissemination
These MIS objective are discussed below in detail.
Data Capturing : MIS capture data from various internal and external sources of the
organization. Data capturing may be manual or through computer terminals.
Processing of Data: The captured data is processed to convert into the required
information. Processing of data is done by such activities as calculating, sorting,
classifying, and summarizing.
Storage of Information: MIS stores the processed or unprocessed data for future use.
If any information is not immediately required, it is saved as an organization record,
for later use.
Retrieval of Information: MIS retrieves information from its stores as and when
required by various users.
Dissemination of Information: Information, which is a finished product of MIS, is
disseminated to the users in the organization. It is periodic or online through a
computer terminal.
Following are the characteristics of MIS:
 System Approach
 Management Oriented
 Need-Based
 Exception Based
 Future Oriented
 Integrated
 Long Term Planning
 Sub-System Concept
 Central Database
The broad functions of MIS are as follows:
To Improve Decision-Making: The Management Information System (MIS) furnishes
relevant information on diverse matters, thereby enhancing the decision-making
prowess of the management. By utilizing the speedy and precise data provided by the
MIS, managers can make prompt and informed decisions, which ultimately enhances
the quality of decision-making and contributes to the company’s value.
To Improve Efficiency: The Management Information System (MIS) facilitates
managers in executing their duties with enhanced ease and efficiency, resulting in
improved productivity.
To Provide Connectivity: The Management Information System (MIS) is commonly
utilized in decision-making processes within a system. One such application of MIS is
to identify issues that require prompt attention, offer timely feedback, and inform
senior management of the current progress and areas for improvement. Therefore, the
main functions of MIS may vary depending on the specific tasks performed by an
organization.
Data Processing: Data processing involves collecting, transmitting, storing, and
processing data to generate an output. Prediction involves analyzing data using modern
mathematics, statistics, or simulation to anticipate future scenarios.
Prediction: By utilizing methods of modern mathematics, statistics, or simulation, data
analysis is conducted to predict potential future scenarios.
Planning: The analysis of data of a regular nature may give many indications on likely
future events or situations and this can be utilized in planning or reviewing the plan
already made earlier.
Control: By examining records of daily, monthly, quarterly, or annual activities, certain
factors that require management and control can be identified. If these factors are
identified in a timely manner, they can be managed relatively easily. However, some
factors may require the attention of senior management to remain under control. It is
essential to note that ignoring smaller factors at the beginning may have the potential
to disrupt other factors as well.
Assistance: One of the principal functions of MIS is to support senior management by
analyzing regular records and drawing inferences about various factors related to the
company’s operational
Limitations of MIS are discussed below:
 While MIS may solve some critical problems but it is not a solution to all
problems of an organization.
 It cannot meet the special demands of each person.
 MIS if designed in an improper manner does not serve the management and
hence is of little relevance.
 The MIS is not good if the basic data is obsolete and outdated.
 Mostly information provided by the MIS is in quantitive form. Hence, it ignores
the qualitative information like the attitude of an employee

Q Discuss in detail the different factors considered for selection of site for a plant
location.
What are the factors affecting in
selection of site?
Explain in brief the comparision among
the locations of plant.
The leading factors affecting plant
location are as follows:
Availability of raw materials:
Availability of raw materials is the most important factor in plant location decisions.
Usually, manufacturing units where there is the conversion of raw materials into
finished goods is the main task then such organizations should be located in a place
where the raw materials availability is maximum and cheap.
Nearness to the market:
Nearness of market for the finished goods not only reduces the transportation costs,
but it can render quick services to the customers. If the plant is located far away from
the markets then the chances of spoiling and breakage become high during transport. If
the industry is nearer to the market then it can grasp the market share by offering quick
services.
Availability of labor:
Another most important factor which influences the plant location decisions is the
availability of labor. The combination of the adequate number of labor with suitable
skills and reasonable labor wages can highly benefit the firm. However, labor-intensive
firms should select the plant location which is nearer to the source of manpower.
Transport facilities:
In order to bring the raw materials to the firm or to carrying the finished goods to the
market, transport facilities are very important. Depending on the size of the finished
goods or raw materials a suitable transportation is necessary such as roads, water, rail,
and air. The transportation costs must be kept low.
Availability of fuel and power:
Unavailability of fuel and power is the major drawback in selecting a location for
firms. Fuel and power are necessary for all most all the manufacturing units, so
locating firms nearer to the coal beds and power industries can highly reduce the
wastage of efforts, money and time due to the unavailability of fuel and power.
Availability of water:
Depending on the nature of the plant firms should give importance to the locations
where water is available. For example, power plants where use water to produce power
should be located near the water bodies.
Secondary factors
Suitability of climate:
Climate is really an influencing factor for industries such as agriculture, leather, and
textile, etc. For such industries extreme humid or dry conditions are not suitable for
plant location. Climate can affect the labor efficiency and productivity.
Government policies:
While selecting a location for the plant, it is very important to know the local existed
Government policies such as licensing policies, institutional finance, Government
subsidies, Government benefits associated with establishing a unit in the urban areas
or rural areas, etc.
Availability of finance:
Finance is the most important factor for the smooth running of any business; it should
not be far away from the plant location. However, in the case of decisions regarding
plant location, it is the secondary important factor because financial needs can be
fulfilled easily if the firm is running smoothly. But it should be located nearer to the
areas to get the working capital and other financial needs easily.
Competition between states: In order to attract the investment and large scale
industries various states offer subsidies, benefits, and sales tax exemptions to the new
units. However, the incentives may not be big but it can help the firms during its
startup stages.
Availability of facilities:
Availability of basic facilities such as schools, hospitals, housing and recreation clubs,
etc can motivate the workers to stick to the jobs. On the other hand, these facilities
must be provided by the organization, but here most of the employees give preference
to work in the locations where all these benefits/facilities are available outside also. So
while selecting plant location, organizations must give preference to the location
where it is suitable for providing other facilities also.
Disposal of waste:
Disposal of waste is a major problem particularly for industries such as chemical,
sugar, and leather, etc. So that the selected plant location should have provision for the
disposal of waste.
Q What is Plant Layout. What are the objectives of a good plant layout.
A plant layout can be defined as follows:
Plant layout refers to the arrangement of physical facilities such as machinery,
equipment, furniture etc. with in the factory building in such a manner so as to have
quickest flow of material at the lowest cost and with the least amount of handling in
processing the product from the receipt of material to the shipment of the finished
product.
An efficient plant layout is one that can be instrumental in achieving the following
objectives:
a) Proper and efficient utilization of available floor space
b) To ensure that work proceeds from one point to another point without any delay
c) Provide enough production capacity.
d) Reduce material handling costs
e) Reduce hazards to personnel
f) Utilise labour efficiently
g) Increase employee morale
h) Reduce accidents
i) Provide for volume and product flexibility
j) Provide ease of supervision and control
k) Provide for employee safety and health
l) Allow ease of maintenance
m) Allow high machine or equipment utilization
n) Improve productivity
Q Explain the different factors considered for a good Plant Layout.
Discuss the factors considered for a good stores layout.
Discuss in detail and characteristics of good plant layout.
Discuss the different factors considered for a Building Design in a factory.
While deciding his factory or unit or establishment or store, a small-scale businessman
should keep the following factors in mind:
a) Factory building: The nature and size of the building determines the floor space
available for layout. While designing the special requirements, e.g. air conditioning,
dust control, humidity control etc. must be kept in mind.
b) Nature of product: product layout is suitable for uniform products whereas process
layout is more appropriate for custom-made products.
c) Production process: In assembly line industries, product layout is better. In job order
or intermittent manufacturing on the other hand, process layout is desirable.
d) Type of machinery: General purpose machines are often arranged as per process
layout while special purpose machines are arranged according to product layout
e) Repairs and maintenance: machines should be so arranged that adequate space is
available between them for movement of equipment and people required for repairing
the machines.
f) Human needs: Adequate arrangement should be made for cloakroom, washroom,
lockers, drinking water, toilets and other employee facilities, proper provision should
be made for disposal of effluents, if any.
g) Plant environment: Heat, light, noise, ventilation and other aspects should be duly
considered, e.g. paint shops and plating section should be located in another hall so
that dangerous fumes can be removed through proper ventilation etc. Adequate safety
arrangement should also be made.
Thus, the layout should be conducive to health and safety of employees. It should
ensure free and efficient flow of men and materials. Future expansion and
diversification may also be considered while planning factory layout.
Q What are the different types of plant layout? Differentiate between them in
detail
Plant layout may be of four types:
(a) Product or line layout
(b) Process or functional layout
(c) Fixed position or location layout
(d) Combined or group layout

PRODUCT OR LINE LAYOUT:

In this type of layout the machines and equipments are arranged in one line depending
upon the sequence of operations required for the product. It is also called as line
layout. The material moves to another machine sequentially without any backtracking
or deviation i.e the output of one machine becomes input of the next machine. It
requires a very little material handling.
It is used for mass production of standardized products.

Advantages of Product layout:

• Low cost of material handling, due to straight and short route and absence of
backtracking
• Smooth and continuous operations
• Continuous flow of work
• Lesser inventory and work in progress
• Optimum use of floor space
• Simple and effective inspection of work and simplified production control
• Lower manufacturing cost per unit
Disadvantages of Product layout:
• Higher initial capital investment in special purpose machine (SPM)
• High overhead charges
• Breakdown of one machine will disturb the production process.
• Lesser flexibility of physical resources.

PROCESS LAYOUT:
In this type of layout the machines of a similar type are arranged together at one place.
This type of layout is used for batch production. It is preferred when the product is not
standardized and the quantity produced is very small.

Advantages of Process layout:

• Lower initial capital investment is required.
• There is high degree of machine utilization, as a machine is not blocked for a single
product
• The overhead costs are relatively low
• Breakdown of one machine does not disturb the production process.
• Supervision can be more effective and specialized.
• Greater flexibility of resources.

Disadvantages of Process layout:

• Material handling costs are high due to backtracking
• More skilled labour is required resulting in higher cost
• Work in progress inventory is high needing greater storage space
• More frequent inspection is needed which results in costly supervision

COMBINED LAYOUT:
• A combination of process & product layout is known as combined layout.
• Manufacturing concerns where several products are produced in repeated
numbers with no likelihood of continuous production, combined layout is followed

Advantages
1. Production planning and control is easy.
2. Work flow is continuous and smooth.
3. Inspection is easier.
4. Less floor area is required.
5. Better utilization of machines is achieved.
6. Over all cost of production is less.
7. Material handling cost is low.

Disadvantages:
1. All machines cannot be used to their maximum capacity leading to poor facility
utilization and higher capital cost
2. Trained workers are required for this layout.
3. Routing and scheduling is difficult.
4. It needs more frequent inspection.

FIXED POSITION OR LOCATION LAYOUT:

Fixed position layout involves the movement of manpower and machines to the
product which remains stationary. The movement of men and machines is advisable as
the cost of moving them would be lesser. This type of layout is preferred where the
size of the job is bulky and heavy. Example of such type of layout is locomotives,
ships, boilers, generators, wagon building, aircraft manufacturing, etc.

Advantages of Fixed position layout:

• The investment on layout is very small
• The layout is flexible as change in job design and operation sequence can be easily
incorporated.
• Adjustments can be made to meet shortage of materials or absence of workers by
changing the sequence of operations.

Disadvantages of Fixed position layout:

• As the production period being very long so the capital investment is very high.
• Very large space is required for storage of material and equipment near the product.
• As several operations are often carried out simultaneously so there is possibility of
confusion and conflicts among different workgroups.
2 Summary of Characteristics for Fixed Position, Process and Product Layout
Q What is flow pattern. Explain in detail the different types of flow patterns.
What is flow pattern. Differentiate between U-Flow & S-Flow.
Explain different types of flow pattern
The flow pattern is the system for movement of raw materials from the beginning to
the end where it is converted into finished or final product.
Flow Pattern
One of the most important objectives of plant layout is to achieve an optimum
effective flow of materials (raw materials & in process materials) through the plant.
Naturally the principle of minimum movements forms the basis for optimum effective
flow.
The principle of minimum movements reduces material handling costs; in process
inventory & space for processing.
While designing a new plant layout, generally the flow patterns are decided earlier.
Types of Flow Pattern
Line flow: Preferred in buildings having long lengths & smaller widths.
L-type flow: Used where buildings are more wide but less long as compared to line
flow type buildings.

Circular flow: Preferred for rotary handling systems. Different work stations are
located along the circular path.

U-type flow: Supervision is simpler as compared to others preferred in square-shaped

buildings.

S or inverted S: Preferred for production lines longer than u-type & in square shape
buildings. The system is compact, space has been better utilized & supervision is
efficient.

Combination of line flow & circular type: As compared to line flow, this system needs
smaller building lengths.

Q What is material requiremert planning. Discuss the purpose and advantages of

MRP.
MRP refers to the basic calculations used to determine components required from end
item
requirements. It also refers to a broader information system that uses the dependence
relationship
to plan and control manufacturing operations.
“Materials Requirement Planning (MRP) is a technique for determining the quantity
and timing for the acquisition of dependent demand items needed to satisfy master
production
schedule requirements.”
Objectives of MRP
1. Inventory reduction: MRP determines how many components are required when
they are required in order to meet the master schedule. It helps to procure the
materials/ components as and when needed and thus avoid excessive build up of
inventory.
2. Reduction in the manufacturing and delivery lead times: MRP identifies materials
and component quantities, timings when they are needed, availabilities and
procurements and actions required to meet delivery deadlines. MRP helps to avoid
delays in production and priorities production activities by putting due dates on
customer job order.
3. Realistic delivery commitments: By using MRP, production can give marketing
timely information about likely delivery times to prospective customers.
4. Increased efficiency: MRP provides a close coordination among various work
centres and hence help to achieve uninterrupted flow of materials through the
production line. This increases the efficiency of production system
Advantages of MRP
Use of MRP is helpful to the production control department to understand the effect of
changes in future periods. When MRP is implemented, the prime need is to establish
correct BOM and a cycle-count process to guarantee reliable inventory records. It
triggers a process of self-study to improve BOM. Inventory tracking often leads to
marking of non-value added activities. Other benefits of MRP system are:
 Customer service is improved
 Reduction in lead time
 Reduction in work-in-process
 Reduction in past-due orders
 Elimination of annual inventory
 Reduction in finished good inventory, raw material, components and parts, and
safety stock
 Increase in productivity
 Capacity constraints are better understood
 Inventory turn-over increases.
All the above benefits are due to correct tracking of inventory and accurate estimation
of planned order for each time horizon.
Drawbacks of MRP

(i) Incorrectness in Suppliers Lead Time: MRP depends heavily on correctness of the
lead-time stored for each item. Correct estimate of lead-time depends upon
correlations with supplier, supplier's familiarity with the product, vendor reliability,
etc. In case this goes wrong, the component or raw material will not reach in time,
causing incorrectness in other calculations also. MRP calculations are hierarchical in
nature (means, dependent upon previous layer of BOM structure). This makes
correctness in data as a compulsory pre-requisite.

(ii) Incorrectness in Inventory Data: This causes incorrectness in the calculations of net
requirements. This may happen very frequently due to:
(a) miscounting
(b) scrap, not being accounted for
(c) items lost in transit.

(iii) Inaccuracy in Manufacturing Lead Time: The in-house production is often

rescheduled or adjusted
due to:
(a) Change in customer's demand.
(b) Change in workload of factory, causing changes in lead time of manufacturing.
Busy factory causes more work-in-process and queue before operations, resulting in
higher lead times. Lighter factory load may lead to quick processing on machine, i.e.,
shorter lead times. When this lead time is incorrect, then the work orders are issued at
incorrect time, resulting into parts being completed late, or in the higher side of
waiting time. This is a waste, which is certainly a cause of great concern.

(iv) Inaccuracy in BOM Structure: This causes the inaccuracy in the estimates of gross
requirements to be calculated. This can happen when:
(a) there is a design change, and
(b) component substitution is implemented without prefer recording.

Q Define Inventory Control. What are the objectives of inventory control.

What is Inventory Control. Write its objectives and advantages.
What do you mean by term inventory? Give classification of inventories
Explain the different methods of Inventory Control
Inventory control means making the desired item of required quality and in required
quantity, available is to required to various departments when needed. Too much
inventory creates a problem of their storage, huge investment and the safety of stored
items from deterioration, pilferage, damage etc. is to be ensured. However, low
inventory leads to chances of stoppage of production, increase in overheads and
disruption in production schedules and delivery promises. Therefore, optimum amount
of inventory needs to be maintained in stores.
OBJECTIVES OF INVENTORY CONTROL
1. To maintain the overall investment at the lowest level, consistent with operating
requirements.
2. To supply the product, raw material, sub-assemblies, semi-finished goods etc. to its
users as per their requirements at right time and at right price.
3. To keep inactive, waste, surplus, scrap and obsolete items at the minimum level.
4. To minimize holding, replacement and shortage costs of inventories and maximize
the efficiency in production and distribution.
5. To treat inventory as investment which is risky. For some items, investment may
lead to higher returns and for others less returns.
6. To protect against inflation since the prices of materials are constantly increasing.
Thus it is important to invest in the inventories and save whenever the price of the
materials goes up. However this benefit can only be availed if cost of holding
inventory is taken care off.
7. To avail quantity discounts on bulk purchases.

Advantages of Inventory Control:

1. There is no shortage of materials at any stage of production.
2. Materials are made available at most economical rates.
3. Delays or interruptions in production due to non-availability of materials do not
occur.
4. Exact and accurate delivery dates can be forecasted.
5. Production schedules and delivery dates are maintained.
6. The materials are protected from spoilage, deterioration, pilferage etc.
7. There is an increase in overall efficiency/productivity of the company.
Some of the popular inventory control methods are as follows-

Economic order quantity- Economic order quantity, also called EOQ, refers to a
formula. It is the ideal inventory quantity that a company must purchase considering
various variables such as total production costs, demand rate, etc.
It helps to free up any tied cash in inventory for most entities and reduces the direct
costs. Also, inventory management software can also be used to manage inventory in a
better way.

ABC analysis- It involves categorising inventory into three buckets called A, B and C
depending upon the importance of the inventory to its profit. A category consists of
expensive items, and hence a small inventory is held. B category has average-priced
inventory with medium sales frequency. Category C inventories are low in value but
with high sales frequency. It requires less inventory control compared to A or B.

Just-in-time (JIT) inventory management- It is a technique to arrange raw material

orders from suppliers in sync with the production schedules to reduce inventory costs.
There will be no excess inventory stored beyond the production requirements, and
hence it leaves no scope for deadstock in the organisation.

Safety stock inventory- Businesses can order an extra quantity of inventory as buffer
stock above the projected demand. It acts as a correction for underestimating demand.

Fast, slow, and non-moving (FSN)- It involves the classification of inventories into
fast-moving, slow-moving and non-moving stock for deciding the pace at which a
business can place orders.

Implementing Inventory control systems- Organisations can use technology-based

inventory control systems. Such systems integrate various inventory tasks such as
purchasing, shipping, receiving, warehousing or storage, tracking, and re-ordering. The
system will ensure the availability of the right inventory at the required locations when
needed to meet product demand. Two types of inventory control systems are available
to choose from. These are perpetual and periodic systems depending upon whether a
business wants to track inventory daily or not

Q Differentiate between ABC & VED analysis with example.

(a) Differentiate between ABC & VED analysis. .
(b) Difference between ABC and VED

ABC Analysis:
ABC analysis is an inventory control technology that helps in classifying items in a
company's inventory based on their importance. The technique involves categorizing
items into three groups based on their relative value or importance to the company.
The categories are:

A Category: This category comprises the most important items in a company's

inventory, usually constituting about 20% of the total inventory value but accounting
for about 80% of the company's sales. These items require close attention and frequent
monitoring to ensure that they are always in stock.

B Category: This category comprises items that are moderately important, accounting
for about 30% of the inventory value but generating only about 15% of the sales.
These items require less attention than A-category items, but still, need to be
monitored regularly.

C Category: This category comprises the least important items, accounting for about
50% of the inventory value but generating only about 5% of the sales. These items
require minimal attention and can be managed with a simple reordering system.

Advantages of ABC Analysis:

 Helps in identifying the most important items in a company's inventory.
 Enables a company to focus its attention and resources on the items that are
most critical to its success.
 Helps in reducing inventory holding costs by identifying the items that need to
be monitored closely.
 Helps in optimizing inventory levels by ensuring that the right amount of
inventory is available for each category of items.

Disadvantages of ABC Analysis:

 Ignores the usage rate of items and focuses only on their value.
 Can be time-consuming and complex to implement for large inventories.
 Assumes that the sales of items are directly proportional to their value, which
may not always be the case.

VED Analysis:
VED analysis is another inventory control technology that helps in classifying items in
a company's inventory based on their criticality. The technique involves categorizing
items into three groups based on their criticality and the urgency of their availability.
The categories are:

Vital Category (V): This category comprises items that are essential for the company's
operations, and their non-availability can cause significant disruptions to the
production process or customer service. These items require immediate attention and
should be kept in stock at all times.

Essential Category (E): This category comprises items that are necessary for the
company's operations, but their non-availability does not cause significant disruptions
to the production process or customer service. These items should be kept in stock, but
their inventory levels can be managed more flexibly than V-category items.

Desirable Category (D): This category comprises items that are not essential for the
company's operations, but their availability can improve efficiency or convenience.
These items can be managed with a more flexible inventory system and can be ordered
based on demand.
Advantages of VED Analysis:

 Helps in identifying the items that are most critical to the company's operations.
 Enables a company to focus its attention and resources on the items that are
most essential to its success.
 Helps in reducing the risk of stockouts for critical items.
 Helps in optimizing inventory levels by ensuring that the right amount of
inventory is available for each category of items.

Disadvantages of VED Analysis:

 Ignores the value of items and focuses only on their criticality.
 Can be time-consuming and complex to implement for large inventories.
 Assumes that the criticality of items is directly proportional to their usage,
which may not always be the case.

Q Explain in detail the GNATT Chart and also write its advantages.
Explain in detail the GNATT Chart
(c) Explain the Gantt Chart Algorithm in brief.
(d) Gantt chart algorithms
A Gantt chart is a type of bar chart that illustrates a project schedule and shows the
dependency relationships between activities and current schedule status.”
In simpler words, Gantt charts are a visual view of tasks displayed against time. They
represent critical information such as who is assigned to what, duration of tasks, and
overlapping activities in a project.
All in all, Gantt charts are the perfect allies for planning, scheduling, and managing a
project.

Advantages of Gantt Chart

 It is to represent the Project schedules and Activities
 Easy to represent Tasks, Sub-tasks, Milestones and Projects Visually on a Graph
 Clear visibility of Dates and Time Frames
 It helps to see the Plans by Day, Week, Month, Quarter and Year
 Helps to effectively mange the Team
 And it helps in efficient Time Management
 Easy to group all sub tasks under a main task
 Also, we can see the Team Members and their responsible tasks
 Easy to Check the Project Status
 We can See the Completed % of Tasks
 Tasks in Progress and Pending work is clearly visible on Stacked Bars
  Helps Managers to easily coordinate with the teams
 Gantt chart is good tool for presenting in Team Meetings

Disadvantages of Gantt Chart
 It requires more efforts and skills to prepare a Gantt format. And managing the
graph is very tedious job.
 Require more efforts for Creating and Managing the Chart
 Updating a Chart is Very Time Consuming
 All Tasks are not visible in a single view of a Gantt
 Need to scroll and Click additional buttons to view remaining items
 Stacks represents only the time and not the hours of the work
 Not easy to re align the tasks from on section to another
 Not easy to calculate the aggregates

Q What is Product Life Cycle.
Product Life Cycle. Product Life Cycle
You are aware that a product or brand goes through several phases from birth until its
death. Firstly a product is launched; it grows, attains maturity, then starts declining and
finally is ironed out. Accordingly the product life cycle is explained by the following
stages; (i) Introductory stage; (ii) Growth stage; (iii) Maturity stage and (iv) Decline
stage.

Introduction Stage : This stage involves introducing a new and previously unknown
product to buyers. Sales are small, the production process is new, and cost reductions
through economies of size or the experience curve have not been realized. The
promotion plan is geared to acquainting buyers with the product. The pricing plan is
focused on first-time buyers and enticing them to try the product

Growth Stage: In this stage, sales grow rapidly. Buyers have become acquainted with
the product and are willing to buy it. New buyers enter the market and previous buyers
come back as repeat buyers. Production may need to be ramped up quickly and may
require a large infusion of capital and expertise into the business. Cost reductions
occur as the business moves down the experience curve and economies of size are
realized. Profit margins are often large. Competitors may enter the market but little
rivalry exists because the market is growing rapidly. Promotion andpricing strategies
are revised to take advantage of thegrowing industry.
Mature Stage: In this stage, the market becomes saturated. Production has caught up
with demand and demand growth slows precipitously. There are few first-time buyers.
Most buyers are repeat buyers. Competition becomes intense, leading to aggressive
promotional and pricing programs to capture market share from competitors or just to
maintain market share. Although experience curves and size economies are achieved,
intense pricing programs often lead to smaller profit margins. Although companies try
to differentiate their products, the products actually become more standardized.
Decline Stage: In this stage, buyers move on to other products and sales drop. Intense
rivalry exists among competitors. Profits dry up because of narrow profit margins and
declining sales. Some businesses leave the industry. The remaining businesses try to
revive interest in the product. If they are successful, sales may begin to grow. If not,
sales will stabilize or continue to decline.

Q Discuss in brief merits and demerits of Single and Multistory building.

Multistory building
Following are the advantages offered by single storey building:
(i) It provides the cheapest overall cost per square meter of operating space of the
plant.
(ii) It is easily and quickly constructed.
(iii) Greater flexibility in layout of the plant possible.
(iv) Truss construction makes for unimpaired operating space.
(v) Minimum vibrations from floors being on the ground.
(vi) Ease of ventilation, heating and air conditioning of the space.
(vii) Elimination of costs and maintenance of stairways.
(viii) Easy to expand by removing walls.
(ix) All equipment is on the same level, providing easier, more effective layout and
control.
(x) Unrestricted floor load capacities available.
(xi) Supervision on one floor easy.

Following are the limitations of single storey buildings:

(i) Cost of heating and ventilation is more.
(ii) Roof maintenance cost is higher.
(iii) Longer ground runs for drainage required.
(iv) Water storage less convenient.
(v) Maintenance of glasses and lights is expensive affair

Following are the advantage of multistory buildings:

(i) Less roof repairs.
(ii) Heating and ventilation cost less.
(iii) Small ground runs for drainage.
(iv) More compact layout.
(v) Provides for maximum operating floor space per square meter of land.
(vi) Easily adopted for the manufacture of light goods.

Following are the limitations of multistory buildings:

(i) These present problems in heavy goods industries.
(ii) Material handling can be relatively expensive for bulky materials because of the
vertical transfer between floors.
(iii) Natural illumination in the center of a multistory building is after poor.
(iv) Flexibility is hampered in multistory buildings because changes in the width and
length of floor are usually impossible except at ground level.

Q What is production planning and control ? Discuss the phases and function of
PPC for an industry with Grus example.
What is Production Planning & Control. Discuss the different components
of PPC
What is Production Planning & Control? Discuss the phases and function
of PPC.
What are the functions of Production Planning and Control?

Functions of production planning and controlling is classified into:

1. Pre-planning fuction
2. Planning function
3. Control function
The functions of production planning and controlling are depicted in the Fig.
1. PRE-PLANNING FUNCTION
Pre-planning is a macro level planning and deals with analysis of data and is an outline
of the
planning policy based upon the forecasted demand, market analysis and product design
and
development. This stage is
concerned with process design
(new processes and
developments, equipment policy
and replacement and work flow
(Plant layout). The pre-planning
function of PPC is concerned with decision-making with respect to methods, machines
and work flow with respect to availability, scope and capacity.
2. PLANNING FUNCTION
The planning function starts once the task to be accomplished is specified, with the
analysis of four M’s, i.e., Machines, Methods, Materials and Manpower. This is
followed by process
planning (routing). Both short-term (near future) and long-term planning are
considered.
Standardisation, simplification of products and processes are given due consideration.
3. CONTROL FUNCTION
Control phase is effected by dispatching, inspection and expediting materials control,
analysis of
work-in-process. Finally, evaluation makes the PPC cycle complete and corrective
actions are
taken through a feedback from analysis. A good communication, and feedback system
is essential
to enhance and ensure effectiveness of PPC.

Q Explain aggregate planning with proper example.

Write about Aggregate Production Planning. Discuss its Objectives and
Strategies.
Aggregate planning is an intermediate term planning decision. It is the process of
planning the
quantity and timing of output over the intermediate time horizon (3 months to one
year). Within
this range, the physical facilities are assumed to –10 be fixed for the planning period.
Therefore,
fluctuations in demand must be met by varying labour and inventory schedule.
Aggregate planning
seeks the best combination to minimise costs.
The following are the guidelines for aggregate planning:
1. Determine corporate policy regarding controllable variables.
2. Use a good forecast as a basis for planning.
3. Plan in proper units of capacity.
4. Maintain the stable workforce.
5. Maintain needed control over inventories.
6. Maintain flexibility to change.
7. Respond to demand in a controlled manner.
8. Evaluate planning on a regular base
The variables of the production system are labour, materials and capital. More labour
effort is
required to generate higher volume of output. Hence, the employment and use of
overtime (OT)
are the two relevant variables. Materials help to regulate output. The alternatives
available to the
company are inventories, back ordering or subcontracting of items.

These controllable variables constitute pure strategies by which fluctuations in demand

and
uncertainties in production activities can be accommodated by using the following
steps:

1. Vary the size or the workforce: Output is controlled by hiring or laying off workers
in
proportion to changes in demand.
2. Vary the hours worked: Maintain the stable workforce, but permit idle time when
there
is a slack and permit overtime (OT) when demand is peak.
3. Vary inventory levels: Demand fluctuations can be met by large amount of
inventory.
4. Subcontract: Upward shift in demand from low level. Constant production rates can
be
met by using subcontractors to provide extra capacity
Aggregate planning examples
Some companies make different products. The demand for two products might
increase, but the demand for the other three might decrease. The company only wants
to know about the overall growth and what resources (people, machines, storage, and
raw materials) it will need next year.

If the company forecasts how much each product will sell separately, it is likely that
each prediction will have some errors. However, combining these forecasts will give a
more accurate idea of the total demand. This is because high and low tend to cancel
each other out when you look at them together.

Having an aggregate production plan is better than discussing individual production

plans because it considers all potential changes in demand instead of selective
changes.

2. AGGREGATE PRODUCTION (OUTPUT) PLANNING

The process of determining output levels of product groups over the coming six to
eighteen
months on a weekly or monthly basis. It identifies the overall level of outputs in
support of the
business plan. The plan recognizes the division’s existing fixed capacity and the
company’s
overall policies for maintaining inventories and backlogs, employment stability and
subcontracting

Q Break Even Chart.

It has been defined as, “a chart which shows the
profitability or otherwise of an undertaking at
various levels of activity and as a result indicates the
point at which neither profit nor loss is made.”
Since it shows the effects of cost and revenue at
varying level of sales it has been rightly called Cost-
Volume-Profit graph (CVP graph).
BEC depicts the following information:
(a) Cost (i.e. Fixed, Variable and Total);
(b) Sales value and Profit/Loss;
(c) Break-Even Point;
(d) Margin of Safety.
Certain Assumption about the CVP Graph:
(a) Fixed Cost, will remain constant during the relevant period;
(b) Semi-Variable Cost can be bifurcated into variable and fixed components.
(c) Variable cost per unit also will not make any change during the relevant period.
(d) Selling price also will not make any change during the relevant period
irrespective of the quantity sold.
(e) Operating efficiency also will remain constant.
(f) Product mix will remain unchangeable.
(g) Volume of production and sales are equal
Q Explain BEP (Break-even-point) with the help of a suitable illustration. How
does pricing strategy work in different situations?
When your company reaches a break-even point, your total sales equal your total
expenses. This means that you’re bringing in the same amount of money you need to
cover all of your expenses and run your business. When you break-even, your business
does not profit. But, it also does not have a loss.
Typically, the first time you reach a break-even point means a positive turn for your
business. When you break-even, you’re finally making enough to cover your operating
costs.
Finding your break-even point can help you determine if you need to do one or both of
the following:
 Increase your prices
 Cut expenses
If your business’s revenue is below the break-even point, you have a loss. But if your
revenue is above the point, you have a profit.
Use your break-even point to determine how much you need to sell to cover costs or
make a profit. And, monitor your break-even point to help set budgets, control costs,
and decide a pricing strategy.
Break-even Point for Sales Dollars = Fixed Costs / [(Sales – Variable Costs) / Sales]
Q Explain the elements of Cost and how it is related with BEP.
The element of cost are :-
1. Direct Material : It represents the raw material or goods necessary to produce or
manufacture a product. The cost of direct material varies according to the level of
output. For example, Milk is the direct material of ghee.
2. Indirect Material: It refers to the material which we require to produce a product but
is not directly identifiable. It does not form a part of a finished product. For example,
the use of nails to make a table. The cost of indirect material does not vary in the direct
proportion of product.
3. Direct Labour: It refers to the amount which paid to the workers who are directly
engaged in the production of goods. It varies directly with the level of output.
4. Indirect Labour: It represents the amount paid to workers who are indirectly
engaged in the production of goods. It does not vary directly with the level of output.
5. Direct Expenses: It refers to the expenses that are specifically incurred by the
enterprises to produce a product. The production cannot take place without incurring
these expenses. It varies directly with the level of production.
6. Indirect Expenses: It represents the expenses that are incurred by the organization to
produce a product. These expenses cannot be easily identified accurately. For example,
Power expenses for the production of pens.
7. Overhead: It refers to all indirect materials, indirect labour, or and indirect expenses.
8. Factory Overhead: Factory overhead or Production Overhead or Works Overhead
refers to the expenses which a firm incurs in the production area or within factory
premises.
Indirect material, rent, rates and taxes of factory, canteen expenses etc.are example of
factory overhead.
9. Administration Overhead: Administrative or Office Overhead refers to the expenses
which are incurred in connection with the general administration of the organizations.
Salary of administrative staff, postage, telegram and telephone, stationery etc.are
examples of administration overhead.
10. Selling Overhead: All expenses that a firm incurs in connection with sales are
selling overheads. Salary of sales department staff, travelers’ commission,
advertisement etc.are example of selling overhead.
11. Distribution Overhead: It represents all expenses incurred in connection with the
delivery or distribution of finished goods and services from the manufacturer to the
consumer. F Delivery van expenses. loading and unloading, customs duty, the salary of
deliverymen are examples of distribution overhead.
Q Why is break even analysis done in facility location describe its significance?
Break Even Analysis. Is a good method when the cost of each location are known. It
can help managers compare the locations alternatives on the basis on quantitative
factors that is expressed in terms of total cost. Break-even analysis implies that at
some point in the operation the Total Revenue = Total cost. The best way to view the
analysis is to use a break-even graph plotting revenue and cost as a function of the
output.
There are 4 basic steps in the Break Even Analysis method. They are as follows:
 Determine the fixed and variable cost of the locations.
 Express the variable and fixed cost in a equation for total cost and solve for the
break even point.
 Plot the points on the graph for all alternatives.
 Visually identify the location with the lowest cost versus total output.
Significance of Break Even Point
(i) All costs can be separated into fixed and variable components
(ii) Fixed costs will remain constant at all volumes of output
(ili) Variable costs will fluctuate in direct proportion to volume of output
(iv) Selling price will remain constant
(v) Product-mixwill remain unchanged
(vi) The number of units of sales will coincide with the units produced so that there
is no opening or closing stock
(vii) Productivity per worker will remain unchanged
(viil) There will be no change in the general price level
Q What is Break Even Analysis? Give its importance
Explain the BEP, its Importance and Scope
A break-even analysis is an economic tool that is used to determine the cost structure
of a company or the number of units that need to be sold to cover the cost. Break-even
is a circumstance where a company neither makes a profit nor loss but recovers all the
money spent.
The break-even analysis is used to examine the relation between the fixed cost,
variable cost, and revenue. Usually, an organisation with a low fixed cost will have a
low break-even point of sale.
Importance of Break-Even Analysis
Manages the size of units to be sold: With the help of break-even analysis, the
company or the owner comes to know how many units need to be sold to cover the
cost. The variable cost and the selling price of an individual product and the total cost
are required to evaluate the break-even analysis.
Budgeting and setting targets: Since the company or the owner knows at which point a
company can break-even, it is easy for them to fix a goal and set a budget for the firm
accordingly. This analysis can also be practised in establishing a realistic target for a
company.
Manage the margin of safety: In a financial breakdown, the sales of a company tend to
decrease. The break-even analysis helps the company to decide the least number of
sales required to make profits. With the margin of safety reports, the management can
execute a high business decision.
Monitors and controls cost: Companies’ profit margin can be affected by the fixed and
variable cost. Therefore, with break-even analysis, the management can detect if any
effects are changing the cost.
Helps to design pricing strategy: The break-even point can be affected if there is any
change in the pricing of a product. For example, if the selling price is raised, then the
quantity of the product to be sold to break-even will be reduced. Similarly, if the
selling price is reduced, then a company needs to sell extra to break-even.
Q Discuss Ratio analysis. How does it convey financial health of the firm.
Ratio Analysis
What do you mean by ratio analysis and fund flow analysis?
Ratio analysis is a quantitative method of gaining insight into a company's liquidity,
operational efficiency, and profitability by studying its financial statements such as the
balance sheet and income statement. Ratio analysis is a cornerstone of fundamental
equity analysis.
 Ratio analysis compares line-item data from a company's financial statements to
reveal insights regarding profitability, liquidity, operational efficiency, and
solvency.
 Ratio analysis can mark how a company is performing over time, while
comparing a company to another within the same industry or sector.
  Ratio analysis may also be required by external parties that set benchmarks
often tied to risk.
 While ratios offer useful insight into a company, they should be paired with
other metrics, to obtain a broader picture of a company's financial health.
 Examples of ratio analysis include current ratio, gross profit margin ratio,
inventory turnover ratio.
Investors and analysts employ ratio analysis to evaluate the financial health of
companies by scrutinizing past and current financial statements. Comparative data can
demonstrate how a company is performing over time and can be used to estimate
likely future performance. This data can also compare a company's financial standing
with industry averages while measuring how a company stacks up against others
within the same sector.
Investors can use ratio analysis easily, and every figure needed to calculate the ratios is
found on a company's financial statements.
Ratios are comparison points for companies. They evaluate stocks within an industry.
Likewise, they measure a company today against its historical numbers. In most cases,
it is also important to understand the variables driving ratios as management has the
flexibility to, at times, alter its strategy to make it's stock and company ratios more
attractive. Generally, ratios are typically not used in isolation but rather in combination
with other ratios. Having a good idea of the ratios in each of the four previously
mentioned categories will give you a comprehensive view of the company from
different angles and help you spot potential red flags.
Fund flow is the cash that flows into and out of various financial assets for specific
periods of time. It's usually measured on a monthly or quarterly basis.
Fund flow doesn't measure the performance of any single asset but emphasizes how
cash is moving. For example, with mutual funds, fund flow measures the cash
involved in share purchases or inflows and the cash resulting from share redemptions
or outflows. It doesn't say anything about how well or badly a fund performed.
Net inflow occurs when more cash flows into, say, the mutual fund than out of it. A net
inflow creates excess cash for managers to invest. Theoretically, this then creates
demand for securities such as stocks and bonds. A net outflow would indicate that
more cash was taken from the mutual fund than was invested in it.
KEY TAKEAWAYS
 Fund flows are a reflection of cash that is flowing in and out of financial assets.
 Investors can look at the direction of the cash flows for insights about the health
of specific stocks and sectors or the overall market.
 Mutual fund or ETF fund managers with net inflow have more cash to invest,
and demand for the underlying assets tends to rise. With net outflows, the
opposite is true.
  High net inflow may reflect growing overall investor optimism.
 High net outflow may suggest increasing investor wariness.
.
Q What are the purchasing and store keeping objectives and policies?
An efficient system of storekeeping has the following objectives:
 To ensure uninterrupted supply of materials and stores without delay to various
production and service departments of the organization.
 To prevent over-stocking and under-stocking of materials.
 To check all materials in terms of quality and quantity.
 To minimize storage costs.
 To ensure effective and continuous control over materials.
 To ensure optimal utilization of available storage space and workers engaged in
storekeeping processes.
 To protect materials from loss and wastage due to defective storage.
 To identify and locate materials in storerooms without delay.
 To protect and safeguard material items from pilferage, theft, fire, and others.
 To develop a system that provides complete and up-to-date information about
all stored items.
The main functions of storekeeping are performed in an organization's Stores
Department. They include:
 Issuing purchase requisitions when material is required.
 Receiving purchased stores from the Receiving Department and verifying that
every lot of stores is supported by an indent, a purchase order, and an inspection
note.
 Preparing Goods Received Note in accordance with the different stores lots
received.
 Ensuring that all the Goods Received Notes are regularly posted to the Bin
Card.
 Placing and arranging stores received in suitable places and adhering to the
golden principle of storekeeping: "A place for everything in its place."
 Minimizing storage, handling, and maintaining costs by preserving and
handling materials in the most economical and efficient manner.
 Issuing stores to various business departments and ensuring that all issues are
properly authenticated and accounted for.
 Ensuring adherence to issuing procedures and organizational systems and
guidelines.
 Periodically reviewing the inventory by initiating inventory control systems
(e.g., perpetual inventory control system and ABC system of inventory control).
  Disclosing fullest and up-to-date information about the availability of stores
whenever required. This depends on maintaining proper stores records with the
help of Bin Cards and a Stores Ledger.
 Safeguarding materials from theft, pilferage, fire, and others.
 Supervising and coordinating the duties of different staff working under the
direction of the storekeeper.
 Preventing the entry of unauthorized persons in the stores.
 Maintaining proper stock levels, which are fixed in respect of every item of
stores, and replenishing them when necessary.
Q What is Store Management? Discuss the function performed by Store
Department.
Store keeping is the task of maintaining safe custody of all items of supplies, raw
materials, finished
parts, purchased parts, and other items. These items are held in a storeroom for which
a storekeeper
acts as a trustee. As such, storekeeping can be defined as process of receiving and
distributing stores or supplies.
storekeeping refers to the art of preserving raw materials, work-in-progress, and
finished parts in the stores in the best possible manner.
Generally, in small businesses, storekeeping is a minor task. However, it is always
worth remembering
that careless handling of materials, material pilferage, and deterioration of materials
can lead to reduced profits and even losses.
Therefore, to ensure maximum efficiency, it is important to maintain a well-equipped
storekeeping
department.
In addition, the storekeeper's main duties and responsibilities are:
1. To issue requisitions on the purchase department to ensure materials are purchased
in a timely
way.
2. To accept into stores any materials received from suppliers or returned by the
production
department.
3. To check in all materials in terms of quality and quantity.
To hold all materials in a safe and convenient manner in appropriate bins and
containers.
5. To issue materials against proper authorization.
6. To maintain records of receipts, issues and balance of materials.
7. To watch levels of stock and replenish materials when necessary.
8. To prevent the entry of unauthorized persons into the stores.
9. To advise management on the day-to-day affairs of the stores department.
10. To dispose of scrap or obsolete materials.
What are the different Pricing Strategies for various situation?
PRICE It refers to the value that is put in a product. It represents the sum of values that
consumers are willing to exchange for the benefit of having or using the product. Price
of a product depends upon:
1. Cost of production
2. Segments targeted
3. Ability of consumers to pay
4. Market forces of demand and supply
Price is the only revenue generating element in the 4Ps.
PRICING it involves determination of the price of the product. It plays an important
role in the
marketing of the goods and services. It is considered as an effective weapon during
stiff competition as firms compete with each other on the basis of price.
Pricing strategies or methods
1. Cost plus pricing method
2. Penetration pricing method
3. Skimming pricing method
4. Variable pricing method

Cost Plus Pricing Method

Cost plus pricing is the most common and simple pricing strategy. As per this strategy
the price is determined by calculating the sum of the cost of production and
appropriate profit. However, this strategy does not stress on the optimum utilization of
all available resources. This strategy completely depends on the manufacturing
estimates. Costs associated with manufacturing are
calculated to
1. Justify the planned capital expenditure
2. Calculate the cost of production for a new or re-designed product
3. Optimize the use of high cost areas.
The estimation is done by computing the factors like volume of resources, the cost
associated with these resources and the duration for which these resources will be
used. When it is required to justify the capital expenditure, the depreciation and cash-
flow analysis is done using accounting methods.

Penetration Pricing: This strategy requires the price to be set to a value lower than the
market price. This is usually done to acquire new customers. The whole idea is that the
customers will switch to the new brand due to the lower prices. This is a short-term
strategy and is usually used to increase the market share or sales volume rather than to
incur huge profits. Once the required market share is achieved the prices are increased
to regular values.
Skimming or Creaming Pricing Method
In skimming or creaming, few goods are sold at a high price so as to reach the break-
even point as quickly as possible. The sale of products will last for a limited period of
time so that most of the investment is recovered. The organization has to let go of the
higher number of sales in this case. This strategy is usually employed in the electronics
industry, for example, smart phones. This strategy targets the early adopters, who have
lower price-sensitivity, which can be because of their need for the product out-weighs
their
1. need for economics
2. more value attributed by them to the product
3. having high disposable income
Once skimming is period is over, the seller must revert back to other pricing strategies
like economy or penetration.

Variable price method: In this, the same goods or services are sold at different prices to
different
customers. This is usually found in cultures where dickering is common or where
bidding or auction is
taking place. Even in place where fixed pricing is standard, the prices may vary
depending on the
volume of the products purchased by the consumer. To avail this the customers must
comply with
certain criteria. The following are examples.
1. Siblings joining the same school get lower fee compared to others.
2. Bulk packings have lesser unit price as compared to the single packing or small
volume packings
3. The more the bargaining power of the customer, the lesser will be the price.
4. Depending on the consumer’s ability to pay, the price might vary.

Q What are the different criteria to select material handling devices?

The most important factors affecting the selection of material handling equipment.
Space : How much room do you have to house the equipment?
Functionality: Exactly what do you need the equipment to do, and what might you
want it to do in the future?
Capacity: What is a realistic and best case through-put?
Customisation: Do you have any custom requirements?
Operator risk: What are the safety risks associated with using the equipment and are
there any additional safety measures that need to be taken?
Maintenance : How often will spare parts be required and what is the ongoing cost of
maintenance?
Product: What is the product exactly? How viscous is it? This is particularly important
when it comes to tippers and tilters.
Q Explain the different types of material handling system.
Types of material handling systems: The handling of material is either manual or
automated.

Manual handling: Manual handling involves manual methods to move individual

containers by lifting,lowering, filling, emptying, or carrying them. Ergonomic
improvements can be used to modify manual handling tasks to reduce injuries by
reconfiguring the tasks and using equipment such as lift/tilt/turn tables etc., to reduce
reaching and bending.
Manual handling can expose the workers to injuries especially handling heavy
equipment.

Automated handling: Automated handling equipment can be used to reduce and

sometimes replace the need to manually handle material.
Most of them require a human operator for tasks such as loading/unloading and
driving. In a way it is semi automated. Automated handling is increasing with
advances in machine intelligence, and robotics.
Q What are the sources of Industrial finance?
Sources of industrial finance

Finance has been aptly described as the life blood of industry. It is a pre-requisite for
the mobilization of real resources to organise production and marketing. The provision
of adequate finance is of basic importance for the smooth working of the industries
and for their expansion.
The industrial finance pertains to the financial system that provides financial resources
for the conduct of industrial activities. The need is for different types of finance and an
efficient financial system that adequately finances production and enhances industrial
capacity.
Sources of Industrial Finance
There are Internal and External Sources of Industrial Finance
Internal Sources of Industrial Finance
1) Internal Self-finance
2) Equity, Debentures and Bonds
3) Public Deposits
4) Loan from Banks
5) The Managing Agency System
6) Indigenous Bankers
7) Development Finance Institutions
8) Ploughing Back of Profit
External Sources of Industrial Finance
A) Foreign Direct Investment
B) Institutional Investment
C) Non-Resident Investments
Q Explain the nature and scope of financial management.
financial management is the business function that deals with investing the available
financial resources in a way that greater business success and return-on-investment
(ROI) are achieved. Financial management professionals plan, organize and control all
transactions in a business. They focus on sourcing the capital whether it is from the
initial investment by the entrepreneur, debt financing, venture funding, public issue, or
any other sources. Financial management professionals are also responsible for fund
allocation in an optimized way to ensure greater financial stability and growth for the
organization.
The nature of financial management includes the following −
Estimates capital requirements: Financial management helps in anticipation of funds
by estimating working capital and fixed capital requirements for carrying business
activities.
Decides capital structure: Proper balance between debt and equity should be attained,
which minimizes the cost of capital.Financial management decides proper portion of
different securities (common equity, preferred equity and debt).
Select source of fun: Source of fund is one crucial decision in every organisation.
Every organisation should properly analyse various source of funds (shares, bonds,
debentures etc.) and must select appropriate funds which involves minimal risk.
Selects investment pattern: Before investing the amount, the investment proposal
should be analysed and properly evaluates its risk and returns.
Raises shareholders value: It aims to increase the amount of return to its shareholders
by decreasing its cost of operations and increase in profits.
Finance manager should focus on raising the funds from different sources and invest
them in profitable avenues.
Management of cash: Finance manager observes all cash movements (inflow and
outflow) and ensures they should face any deficiency or surplus of cash.
Apply financial controls −Implying financial controls helps in keeping the company
actual cost of operation within limits and earning the expected profits.
There different approaches involved like developing certain standards for business in
advance, comparing the actual cost or performances with pre-established standards and
taking all require remedial measures.
Scope of financial management
Financial management covers wide area with multidimensional approaches. It plays an
important role in overall management by dealing with various functional departments
like personnel, marketing and production.
The scope of financial management is explained below −
Financial management and economics: Financial economics is one of the emerging
area, which provides immense opportunities to finance and economical areas. Using
macro and micro economics concepts for financial management approach. Financial
managers use investment decisions, micro and macro environmental factors, money
value discount factor, economic order quantity etc.
Financial management and accounting: In olden days, both financial management and
accounting treated as same and merged, but now-adays, both are separated and
interrelated.
Financial management and mathematics: Latest approach of the financial management
applied large number of mathematical and statistical tools and techniques called
econometrics.
Financial management and production management: Production performances need
finance, because the expenses of production (raw material, machinery wages,
operating expenses etc.) are carried out by finance department and appropriate funds
are allotted to each stage of production.
Financial management and marketing: The finance manager or department is
responsible to allocate the adequate funds to marketing department by which goods
will be sold by innovative and modern approaches.
Financial management and human resources: Financial manager should carefully
evaluate the requirement of manpower in respective departments and allocates finance
to human resource department in the form of wages, salary, bonus and other monetary
benefits.
Q Write Short Notes (any four)
Q CORELAP
CORELAP (Computerized Relationship Layout Planning) is a facility layout algorithm
that considers the total closeness rating (TCR) for each department with data input on
the degree of activity relationship chart closeness, the flow of goods, displacement,
and space requirements (Dwianto et al. 2016). Each activity is marked according to its
level of proximity, namely A (absolutely necessary), E (especially important), I
(important), O (ordinary), U (unimportant), X (undesirable) with each TCR score A =
5, E = 4, I = 3, O = 2, U = 1, and X = 0
CORELAP converts qualitative input data into quantitative data and uses this
information to determine the first facility to enter the layout. Subsequent facilities are
then added to the layout, once at a time, based on their level of interaction with
facilities already in the layout. By using CORELAP it is possible to compute space
requirement as well as maximum building length to width ratio.
Q Just In Time.
The just-in-time (JIT) inventory system is a management strategy that aligns raw-
material orders from suppliers directly with production schedules. Companies employ
this inventory strategy to increase efficiency and decrease waste by receiving goods
only as they need them for the production process, which reduces inventory costs. This
method requires producers to forecast demand accurately.
KEY TAKEAWAYS
 The just-in-time (JIT) inventory system is a management strategy that
minimizes inventory and increases efficiency.
 Just-in-time manufacturing is also known as the Toyota Production System
(TPS) because the car manufacturer Toyota adopted the system in the 1970s.
 Kanban is a scheduling system often used in conjunction with JIT to avoid
overcapacity of work in process.
 The success of the JIT production process relies on steady production, high-
quality workmanship, no machine breakdowns, and reliable suppliers.
 The terms short-cycle manufacturing, used by Motorola, and continuous-flow
manufacturing, used by IBM, are synonymous with the JIT system
The just-in-time (JIT) inventory system minimizes inventory and increases efficiency.
JIT production systems cut inventory costs because manufacturers receive materials
and parts as needed for production and do not have to pay storage costs.
Manufacturers are also not left with unwanted inventory if an order is canceled or not
fulfilled.
One example of a JIT inventory system is a car manufacturer that operates with low
inventory levels but heavily relies on its supply chain to deliver the parts it requires to
build cars on an as-needed basis. Consequently, the manufacturer orders the parts
required to assemble the vehicles only after an order is received.
For JIT manufacturing to succeed, companies must have steady production, high-
quality workmanship, glitch-free plant machinery, and reliable suppliers.
Q Difference between LIFO & FIFO
Q BIN CARD.
The Bin Card is maintained by the Storekeeper. It is used to record the stock of each
store item. This is maintained for every item available in the store. It gets updated after
each receipt or issue. This helps in maintaining and monitoring inventory quickly and
hassle-free. Bin cards are also known as stock cards and inventory cards. These are
maintained offline by the storekeepers.
A Bin card is a common term in the retail industry that is used to determine the
inventory balance of a business. Bin cards include a table with multiple columns and
rows.
It contains data such as the item name, quantity, identification code, and brand name.
Storekeepers use it to keep track of the inventory in their stores. Every store keeps bin
cards for each item or good.
Q Stock Verification.
Stock Verification is a process of confirming the accuracy and integrity of inventory
records stored in an organization’s database. This involves physically verifying or
counting stock items to compare their actual count with the recorded count in the
database.
The main purpose of stock verification is to ensure that accurate records are
maintained to avoid discrepancies in tracking inventory, improve operational
efficiency and make better decisions based on reliable data. Additionally, it helps
reduce shrinkage due to theft or mismanagement, enables effective resource
management, and ensures compliance with government regulations.
The primary benefit of stock verification is that it helps ensure accurate inventory
tracking and record keeping which in turn helps maintain an efficient inventory
management system. Additionally, it also promotes better customer service by
allowing for quick order fulfillment and avoiding any delays due to inaccurate data.
Furthermore, stock verification helps reduce losses related to theft or mishandling of
inventory as well as aids in compliance with government regulations.
Q Types of Tenders.
Basically, a tender is an offer or invitation to bid for a project or to accept a formal
offer such as a takeover bid. This term usually refers to the process through which the
government and financial institutions put forward invitation bids for large projects.
These bids are to be submitted within a given deadline. Another application of the term
tender or tendering is when shareholders submit their shares or securities in response
to a takeover offer.
The 4 main types of tenders are:
 Open tender
 Selective tender
 Negotiated tender
 Single-stage and two-stage tender

Open tender: Open tendering is the main tendering procedures employed by both the
government and private sector. Open tendering allows anyone to submit a tender to
supply the goods or services required and offers an equal opportunity to any
organisation to submit a tender. This type of tender is most common for the
engineering and construction industry.
Open tendering provides the greatest competition among suppliers and has the
advantage of creating opportunities for new or emerging suppliers to try to secure
work. However, not all those who bid may be suitable for the contract and more time is
required to evaluate the tenders.

Selective tender: Selective tendering only allows suppliers to submit tenders by

invitation. These suppliers are those who are known by their track record to be suitable
for a contract of that size, nature and complexity required. Selective tendering gives
clients greater confidence that their requirements will be satisfied. It may be
particularly appropriate for specialist or complex contracts, or contracts where there
are only a few suitable firms. However, it can exclude smaller suppliers or those trying
to establish themselves in a new market.

Negotiated tender: Negotiated tenders are extensively used in the engineering and
construction industry commencing from tendering till dispute resolutions. Negotiating
with a single supplier may be appropriate for highly specialist contracts, or for
extending the scope of an existing contract. Costs are reduced and allows early
contractor involvement. Since the contractor is part of the project team at a very stage
of the project, this results in better communication and information flow.
Single-stage and two-stage tender: Single-stage tendering is used when all the
information necessary to calculate a realistic price is available when tendering
commences. An invitation to tender is issued to prospective suppliers, tenders are
prepared and returned, a preferred tenderer is selected and following negotiations they
may be appointed.
Two-stage tendering is used to allow early appointment of a supplier, prior to the
completion of all the information required to enable them to offer a fixed price. In the
first stage, a limited appointment is agreed to allow work to begin and in the second
stage a fixed price is negotiated for the contract.
Other types of tender include serial tendering, framework tendering and public
procurement. Serial tendering involves the preparation of tenders based on a typical or
notional bill of quantities or schedule of works. Framework tendering allow the client
to invite tenders from suppliers of goods and services to be carried out over a period
on a call-off basis as and when required. Lastly, public procurement is for public
projects held by the government.

Q Capital Budgeting.
Capital budgeting is a process that businesses use to evaluate potential major projects
or investments. Building a new plant or taking a large stake in an outside venture are
examples of initiatives that typically require capital budgeting before they are
approved or rejected by management.
As part of capital budgeting, a company might assess a prospective project's lifetime
cash inflows and outflows to determine whether the potential returns it would generate
meet a sufficient target benchmark. The capital budgeting process is also known as
investment appraisal.
KEY TAKEAWAYS
 Capital budgeting is used by companies to evaluate major projects and
investments, such as new plants or equipment.
  The process involves analyzing a project's cash inflows and outflows to
determine whether the expected return meets a set benchmark.
 The major methods of capital budgeting include discounted cash flow, payback
analysis, and throughput analysis.
Ideally, businesses could pursue any and all projects and opportunities that might
enhance shareholder value and profit. However, because the amount of capital any
business has available for new projects is limited, management often uses capital
budgeting techniques to determine which projects will yield the best return over an
applicable period.
Although there are a number of capital budgeting methods, three of the most common
ones are discounted cash flow, payback analysis, and throughput analysis.
Q Explain historical development in operation management.

HISTORICAL DEVELOPMENT
Figure 1-2 depicts some of the key individuals and events that contributed to the
development of production operations in the United States over the past 250 years. The
four major stages of development are the (1) handicraft era, (2) industrial revolution,
(3) scientific management era, and (4) operations research and computerized systems
era.
HANDICRAFT ERA
Some of the earliest business ventures in America were colonies begun by the settlers
who were sponsored by European businesses in the early 1600s. But most of those
endeavors were economic disasters, largely because the American pi- oneers were less
skilled and more independent than the craftsmen of Europe. Production of goods
remained at a handicraft level until the industrial revolution took hold in the early
1800s.
As colonization continued, merchants developed trade which depended on England for
imports. But the colonists objected to paying high taxes to England. By 1776, the
efforts at trade reform became political reform. Three noteworthy events occurred
within the span of a few years:
1 James Watt's steam engine (1764) advanced the use of mechanical power to increase
productivity.
2 The Revolutionary War (1776) and resulting U.S. Constitution (1789) encour- aged
capital investment and trade by protecting private property and contract rights.
3 Adam Smith's Wealth of Nations (1776) publicized the advantages of the division of
labor; these included skill development, time savings, and the use of specialized
machines.
INDUSTRIAL REVOLUTION
In the early 1800s the factory system began to develop, spurred on by Henry Slator's
use of water and steam power in textile mills in New England, and by Eli Whitney's
concept of "interchangeable parts." Growth of the factory system was rapid; there was
no well-established craft system to supplant, and unskilled labor was available.
Specialization of jobs and division of labor began to take place. Charles Babbage
promoted an economic analysis of work and pay on the basis of skill requirements.
Starting about 1830, the railroad expansion to the west generated new de- mands for
steel and industrial products. The railroads also placed heavy demands on capital,
which businesses began to procure by selling shares of stock to "outsiders." This
hastened the separation of ownership from management and marked the beginning of
professional management.
By the mid-1800s, many northern industrialists had strong business ties to the south.
They did not want a civil war, but gave President Lincoln their support when
dissolution of the Union looked inevitable. As it turned out, the Civil War encouraged
the industrial growth of the north. Amendments to the Constitution passed as a result
of the war and (ultimately) made business firms "persons" in the eyes of the law. This
gave firms more constitutional rights, and some firms expanded into large financial
empires. Congress finally had to enact antitrust laws (1890 and 1914) to curb their
monopolistic practices. Nevertheless, the nation grew in productive capacity, and the
shift toward work-force urbanization con- tinued at a rapid pace.
SCIENTIFIC MANAGEMENT ERA
By the early 1900s the factory system was well established. Thomas Edison's first
electric generating station was opened in New York City in 1882, and the nation soon
had over 2,000 power stations supplying electricity to factories and mills. Frederick
Taylor was a dissatisfied worker in one of those mills in Philadelphia. He had begun
work as a laborer with the Midvale Steel Company in the late 1800s. Advancing
through the ranks to foreman, master mechanic, and chief engineer, he came to know,
and deplore, the "boondoggling." loafing, and general inefficiencies that existed in his
company.
Taylor refused to accept such practices. Fortunately, he was advanced to a position
where he could experiment with some ideas for improvement. Believing that a
scientific approach to management could improve labor efficiency, he proposed the
actions outlined in Fig. 1-3. Taylor's philosophy became widely known through his
consulting work; his testimony before a congressional commit- tee; and his book,
Principles of Scientific Management, published in 1915. His "shop system," which
included attention to training and instruction, specifica- tions, standards (by stopwatch
studies), and incentive pay systems, brought him the title "Father of Scientific
Management."
Taylor's colleagues and followers helped the young nation become a powerful mass
producer of industrial goods. Frank and Lillian Gilbreth developed motion economy
studies, Henry Gantt instituted a charting system for scheduling produc tion, and
Henry Ford inaugurated assembly-line mass production for automobiles. Others, like
F. W. Harris (economic order quantity model) and Walter Shewhart (statistical quality
control), made analytical contributions. Elton Mayo directed attention to behavioral
factors, and L. H. C. Tippett contributed to work-sampling activities.
By the late 1920s, the United States had become so production-oriented that many
firms overproduced. Prices fell, and a depression ensued. President Frank lin
Roosevelt championed the National Labor Relations Act, which fostered collec tive
bargaining and helped get the country back on its feet. This revived industrial capacity
came just in time for the United States to help bring World War II to
close.
OPERATIONS RESEARCH AND COMPUTERIZED SYSTEMS ERA
Operations Research Operations research involves using quantitative tech niques in a
systematic way to arrive at solutions to problems. During World War II, careful
analysis was needed of battle problems and risk situations, such as those encountered
in transporting troops across submarine-infested waters. Researchers used
mathematical equations to simulate and analyze the effects of various warfare decision
strategies. These techniques of competitive analysis were later applied to problems in
the business world.
As computers became available in the 1950s, the power of operations re- search (OR)
was multiplied. The speed and capacity of computers made them ideal for applying
OR methods, such as linear programming and simulation, to complex business
problems. But at first some of the scheduling and production control problems seemed
even too complex for the computers. Unlike the well-docu- mented accounting
systems, good production control systems were not already available to automate..
By the late 1960s some new (but simple) concepts of independent demand, time
phasing, and material and capacity requirements planning (MRP and CRP) were
introduced by Joseph Orlicky, Oliver Wight, and others. These new ap- proaches took
advantage of the speed and memory capacity of computers and enabled planners to
control production in a way that could never have been done manually because of the
tremendous number of calculations involved. The 1970s. and 1980s witnessed
continued development of MRP II systems and integration of just-in-time (JIT)
inventory concepts plus selected Japanese developments (for example, quality circles,
Kanban), which will be discussed in later chapters.
Today, the manufacturing sector of our economy is undergoing nothing short of an
electronic revolution. It began with microprocessors, which are the "chips," or
processing elements, used in computers. Manufacturers are installing micro-
processors and computers in virtually all types of material handling and processing
equipment. The movement now is toward more fully automated factories and service
systems.
Computers Computerized scanners can readily identify products by reading the bar
codes printed on them. Automated storage and retrieval systems can receive, store,
select, and retrieve information without any human intervention. Com puter-guided
vehicles can deliver materials to where they're needed, when they're needed. Individual
computer-controlled machines can follow programmed instructions, control their own
operations, and respond to directions and requests for information from larger
(mainframe) computers. Some machines even inspect their own output-and reject it if
it doesn't meet the machine's preset standards! And, in some operations, computers
respond to spoken commands. (Fortunately, not many have the capability of talking
back-yet.)
In offices, computers are equally valuable, if not more so. We're all familiar with their
data processing and problem-solving functions. But Boeing, Chrysler, and other
companies employ computers for everything from product design (CAD/CAM) and
purchasing to marketing and public relations. General Electric offers customers
factory-modeling software that allows them to simulate a new factory design on a
computer screen before their plant is constructed. Computers now manage the energy
loads in buildings, adjust window shades, and turn lights on automatically when a
person enters an office.
Robots Robots are now doing much of the monotonous, dirty, and possibly dangerous
work that can be done by machines. In factories, they perform assem- bly, painting,
welding, and other repetitive tasks.
The simplest industrial robots are mechanical arms or fingers that are powered to
follow a fixed pattern of instructions. Robots that are equipped with microprocessors
(or a computer) are "smart": they can react to individualized and online information.
For example, instructions may call for a change in color of the next unit to be painted.
A smart robot can receive the instructions, select mate- rials, and proceed with the task
on its own-and at high speed. An increasing number of firms are using robots to
deliver customized products at volumes that were previously available only under
"hard-wired" mass-production automation
What is the difference between Scheduling and Sequencing?
Scheduling is the allocation of resources over time to perform a collection of tasks and
it is a decision making function. The practical problem of allocating resources over
time to perform a collection of tasks arises in a variety of situations. In most cases,
however, scheduling does not become a concern until some fundamental planning
problems are resolved, and it must be recognized that scheduling decisions are of
secondary importance to a broader set of managerial decisions. The scheduling process
most often arises in a situation where resource availability fixed by the long- term
commitments of a prior-planning horizon.

Sequencing is the order of processing a set of tasks over available resources.

Scheduling involves sequencing'' task of allocating as well as the determination of
process commencement and completion times i.e., time-tabling. Sequencing problems
occur whenever there is a choice to the order in which a group of tasks can be
performed. The shop supervisor or scheduler can deal with sequencing problems in a
variety of ways. The simplest approach is to ignore the problem and accomplish the
tasks in any random order. The most frequently used approach is to schedule
heuristically according to predetermined "rules of thumb". In certain cases,
scientifically derived scheduling procedures can be used to optimize the scheduling
objectives.

Q Define scheduling and loading and distinguish between them.

Scheduling: Involves fixing priorities for each job and determining the starting time
and finishing time for each operation, the starting dates and finishing dates for each
part, sub-assembly and final assembly. Scheduling lays down a time-table for
production, indicating the total time required for the manufacture of a product and also
the time required for carrying out the operation for each part on each machine or
equipment.
Loading: Facility loading means loading of facility or work center and deciding which
jobs to be assigned to which work center or machine. Loading is the process of
converting operation schedules into practice. Machine loading is the process of
assigning specific jobs to machines, men or work centers based on relative priorities
and capacity utilization.
A machine-loading chart (Gantt chart) is prepared showing the planned utilization of
men and machines by allocating the jobs to machines or workers as per priority
sequencing established at the time of scheduling. Loading ensures maximum possible
utilization of productive facilities and avoids bottlenecks in production It is important
to avoid either over loading or under loading the facilities, work centers or machines to
ensure maximum utilization of resources.
Q What are the advantages and disadvantages of urban and suburban plant
sites?
Discuss the advantages & disadvantages of urban sites
Relative Advantages and Disadvantages of Urban Location:

Advantages:
(i) An urban location is well-connected with different modes of transport.
(ii) If offers excellent facilities for communication.
(iii) Power and water supplies are easily available.
(iv) Facilities for repairs and maintenance are better.
(v) The adequate supply of unskilled and skilled labour force is available.
(vi) The allied and subsidiary industries are present in plenty.
(vii) There are better living conditions for all levels of employees.
(viii) Large local market for the products manufactured is available.
(ix) The services of experts are easily available.
(x) Financing institutions such as banks, underwriting houses and special financial
institutions are nearby.

Disadvantages:
(i) Cost of land and construction of building on it is high.
(ii) Land suitable for a large-scale unit is difficult to get and is usually, limited in the
area; if available.
(iii) Due to the high cost of living in an urban area, labour wages are also high.
(iv) Local taxes and rents tend to increase making the costs of operation higher.
(v) employee-employer relations are often tense.
(vi) Provision of housing accommodation for the staff proves very costly.
(vii) Expansion of the industry because of high costs is seldom possible.
(viii) There are many restrictions imposed by local municipalities regarding the
disposal of effluent water, wastes etc.

Relative Advantages and Disadvantages of Rural Location or Sub-Urban Location:

Advantages:
(i) Land cost is low and is available in plenty for construction of the building and also
for expansion.
(ii) Labour costs are proportionately lower as compared to that of urban locations.
(iii) employee-employer relations are more friendly and there are no union problems.
(iv) Taxes are low.
(v) Several governmental incentives may be available; because it wants the balanced
development in all areas.
(vi) There is the absence of undesirable municipal restrictions on the manufacturing
units.
(vii) There is a lower cost of living for the employees.

Disadvantages:
(i) There is a shortage of skilled labour and managerial personnel.
(ii) There is a lack of transport and communication facilities.
(iii) Power is often not available.
(iv) Rural areas are far away from markets.
(v) The medical, educational and amusement facilities are not available.
(vi) It is difficult to get ancillary services.
(vii) There are difficulties in the procurement of materials.

Q Give the classifications of materials handling equipment. Why is materials

handling considered an important function?
Simply put, material handling is a fancy term for handling goods and materials within
in your warehouse, facility, or storage area.
Material handling can be broken down into to the movement, protection, storage, and
control of materials and products within your facility.
Material handling is made easier using Material Handling Equipment such as forklifts
and order pickers and includes activities such as loading/unloading trucks, palletizing
goods, retrieving goods from storage to be shipped out, and more.
Material Handling is an essential component of any successful warehouse. The reason
being, a proper materials handling protocol will prevent accidents and improve the
efficiency of your facility.
This means material handling can improve customer service by making products easy
to find, move, and ship out; cut costs by reducing the amount of time spent moving
products;, and reduce product damages by properly transporting your products.
Whether its maximizing the efficiency of your loading dock or preventing workplace
accidents, a proper material handling protocol is key.
Q Explain in detail the various methods of forecasting.
TYPES OF FORECASTING METHODS
Qualitative methods: These types of forecasting methods are based on judgments,
opinions,
intuition, emotions, or personal experiences and are subjective in nature. They do not
rely on
any rigorous mathematical computations
Quantitative methods: These types of forecasting methods are based on mathematical
(quantitative)
models, and are objective in nature. They rely heavily on mathematical computations.

Q Deduce the formula for EOQ.

Economic Order Quantity.
Deduce EOQ formula.

Economic order quantity (EOQ) is the ideal quantity of units a company should
purchase to meet demand while minimizing inventory costs such as holding costs,
shortage costs, and order costs. This production-scheduling model was developed in
1913 by Ford W. Harris and has been refined over time. The economic order quantity
formula assumes that demand, ordering, and holding costs all remain constant.
KEY TAKEAWAYS
 The economic order quantity (EOQ) is a company's optimal order quantity that
meets demand while minimizing its total costs related to ordering, receiving,
and holding inventory.
 The EOQ formula is best applied in situations where demand, ordering, and
holding costs remain constant over time.
 One of the important limitations of the economic order quantity is that it
assumes the demand for the company’s products is constant over time.
Q Write short notes on: (Any four)
Q Capital Structure
Capital structure is the particular combination of debt and equity used by a company to
finance its overall operations and growth.
Equity capital arises from ownership shares in a company and claims to its future cash
flows and profits. Debt comes in the form of bond issues or loans, while equity may
come in the form of common stock, preferred stock, or retained earnings. Short-term
debt is also considered to be part of the capital structure.
KEY TAKEAWAYS
 Capital structure is how a company funds its overall operations and growth.
 Debt consists of borrowed money that is due back to the lender, commonly with
interest expense.
 Equity consists of ownership rights in the company, without the need to pay
back any investment.
 The debt-to-equity (D/E) ratio is useful in determining the riskiness of a
company's borrowing practices.
Q Average Pricing Method
Average Price Method - is the method by which the value of total assets or
expenses is assumed to be equal to the average cost of the total assets or expenses.
Under this method, it is assumed that the cost of inventory is based on the average
cost of the goods available for sale during the period. It is computed by dividing
the total cost of goods by the total units which gives a weighted average unit cost
for the units of the closing inventory.

Q Use of Travel Chart

Travel chart is in the form of a two-way table or matrix. The number of backward
movements are shown below the thick diagonal line xy and the forward movements
are indicated above the line. This chart represents the movements of materials as they
travel in the process of being converted into finished products. It shows the origin of
movement, the direction of movements and the destination of materials. It represents
visually useful data for methods study and plant layout.
A travel chart has the following uses:
(a) A travel chart shows the mutual dependence of dependence of departments and
their relative self-sufficiency.
(b) It is a valuable aid in analyzing and visually showing the flow and end use of
materials.
(c) It indicates inter-relationship between different product lines.
(d) it is helpful in planning mutes and materials handling systems so as to reduce
manufacturing cycles.
(e) It is useful in speeding up flow of materials so as to reduce work-in-process and
inventory control problems. (f) A travel chart assists in planning location of production
departments so as to make best use of available floor space.
(g) It is a device for reducing material handling and labor costs.
(h) It is a useful tool for comparing alternative layouts so as to plan the best layout for
the plant.
Thus, a travel chart is a complete picture of the travel of materials from the stores
room to the shipping department. It helps in deciding the location of producing
sections in relation to each other, specially in functional layout so as to minimize
transport cost on materials.

Q Flexible Production
A flexible manufacturing system (FMS) is a production method that is designed to
easily adapt to changes in the type and quantity of the product being manufactured.
Machines and computerized systems can be configured to manufacture a variety of
parts and handle changing levels of production.
KEY TAKEAWAYS
 A flexible manufacturing system (FMS) is designed up front to be readily
adapted to changes in the type and quantity of goods being produced.
 Production in an FMS is largely automated, reducing overall labor costs.
 An FMS system is, however, more expensive to design and put in place than a
fixed system, and it requires skilled technicians.

Q Explain office automation system. Give their importance

Office Automation System
Office automation systems (OAS), also referred to as office information systems are
computer-based information systems whose primary purpose is to facilitate oral and
written communication. Such a system is a set of tools that gather, process, store,
retrieve, and disseminate information between individual workers, team of workers,
and business entities, both inside and outside the organization.
An office automation system is a tool that enables data to move from one system to
another on its own without human intervention and inaccuracies. These tools help
organizations collect, manage, and analyze securely to accomplish everyday tasks and
processes. It optimizes and automates existing business processes and procedures.
Some of the biggest advantages of automating office workflows include
 Reducing the manual effort to complete mundane tasks
 Cutting down on manual errors
 Shrinking the processing time for items
 Getting insights into process performance metrics
 Gaining greater process visibility and identifying potential bottlenecks
 Making sound business decisions based on data

Q What are the five basic elements of operational excellence describe them in
detail?
There are 5 key points, or pillars, that stand out the most.

Vision: Before you can excel within a company, you need to understand why it exists.
Who are it’s target audience, competitors, what problem does it solve? Once you
understand the vision of a company, you can fully understand how to best excel within
it.

Structure: The structure of a company is the backbone of the whole operation.

Companies are usually built of teams of people, all from different backgrounds with
different strengths and weaknesses, working together towards common goals and
interests. Diversity is a beautiful thing, but when creating and implementing structures,
it is important to understand that the same resources can reap very different results
based on the person it’s given to.
Try to keep your structures as basic and jargon free as you can to avoid
miscommunication.

People: People are arguably the most important part of achieving operational
excellence. We rely on the people that make up a company to complete their tasks on
time, and meet their goals. If one person is behind, everyone else in the chain of
command can easily find themselves behind too. Ensuring that your team is operating
at its full capacity comes down to 5 key elements.

Fairness- Treat all employees fairly and equally

Firmness- Be firm and direct in ensuring all team members understand their
responsibilities.
Consistency - Ensuring you and your employees are all consistently meeting deadlines
and showing up.
Staff Development- Fostering an environment that encourages growth will only help
your company achieve operational excellence.
Leadership Growth - Leaders can still develop new skills and refresh the ones they
already have, this may even help encourage staff growth.
Principles: According to an Article by BPM Institute, This pillar can be broken down
into 7 areas that organisations must excel at.
Strategy – leadership creates vision and values and refine it into strategic focus and
direction
Metrics – balanced scorecards cascaded down through the organization
Culture – staff understand the strategy and accountable for the results
Processes – integrated business process architecture (BPM)
Methodology – applying discipline and rigor to continuous improvement through Lean
Six Sigma (LSS)
Project Management – applying discipline and rigor to projects (PMBOK)
Tools – solution delivery (processes, products and services), problem solving and
continuous process improvement

Tools: A lot of different things fall under the category ‘tools’. From computers,
smartphones and other machinery, to Standard Operating Procedures (SOP) and
marketing materials, tools are the things that every person in the company relies on to
get their jobs done efficiently.

Q Explain in detail the various elements of operation strategy?

An operations strategy refers to the system an organization implements to achieve its
long-term goals and mission. It involves decisions based on multiple factors, including
product management, supply chain, inventory, forecasting, scheduling, quality, and
facilities planning and management. For service providers, operations strategy
concerns financing, marketing, human resources, and service that matches the
company’s goal and mission.
There are a few key elements that go into a company’s operations strategy.
1. Production system: An organization’s production system determines the short-term
and long-term planning for how resources are turned into marketable products and
services. A comprehensive production system includes clear workflows, quality
control benchmarks, and supply chain management strategies.
2. Facilities: A company’s operational capabilities are influenced by the size and
number of production facilities. To function properly, specific facilities require
achievable production goals, clear safety procedures, and inventory management
systems.
3. Product or service: One of the most important elements of any operations strategy is
the quality management of a product or service. Businesses analyze the lifecycle of
their products and services in order to predict market trends, adjust their product or
service, and allocate resources to new service development and product development.
4. Technology: Operations strategy increasingly depends on new technological
developments like machine learning, production line automation, real-time metrics,
and market forecasting tools.
5. Resources: A comprehensive overall strategy for operations takes into account the
total operations resources available to an organization, including locational,
mechanical, and human resources.
Q What are the steps involved in strategic-formulation process?
Definition: Strategy Formulation is an analytical process of selection of the best
suitable course of action to meet the organizational objectives and vision. It is one of
the steps of the strategic management process. The strategic plan allows an
organization to examine its resources, provides a financial plan and establishes the
most appropriate action plan for increasing profits.
The steps of strategy formulation include the following:
Strategy Formulation
Definition: Strategy Formulation is an analytical process of selection of the best
suitable course of action to meet the organizational objectives and vision. It is one of
the steps of the strategic management process. The strategic plan allows an
organization to examine its resources, provides a financial plan and establishes the
most appropriate action plan for increasing profits.
It is examined through SWOT analysis. SWOT is an acronym for strength, weakness,
opportunity and threat. The strategic plan should be informed to all the employees so
that they know the company’s objectives, mission and vision. It provides direction and
focus to the employees.
Steps of Strategy Formulation
The steps of strategy formulation include the following:
process of strategy formulation
Establishing Organizational Objectives: This involves
establishing long-term goals of an organization. Strategic
decisions can be taken once the organizational objectives are
determined.
Analysis of Organizational Environment: This involves SWOT
analysis, meaning identifying the company’s strengths and
weaknesses and keeping vigilance over competitors’ actions to
understand opportunities and threats.Strengths and weaknesses
are internal factors which the company has control over.
Opportunities and threats, on the other hand, are external factors
over which the company has no control. A successful
organization builds on its strengths, overcomes its weakness, identifies new
opportunities and protects against external threats.
Forming quantitative goals: Defining targets so as to meet the company’s short-term
and long-term objectives. Example, 30% increase in revenue this year of a company.
Objectives in context with divisional plans: This involves setting up targets for every
department so that they work in coherence with the organization as a whole.
Performance Analysis: This is done to estimate the degree of variation between the
actual and the standard performance of an organization.
Selection of Strategy: This is the final step of strategy formulation. It involves
evaluation of the alternatives and selection of the best strategy amongst them to be the
strategy of the organization.
Q How does the manufacturing technology provide unique advantages to
organization in providing products and services to customers?
Technology in manufacturing has many positive outcomes. Automation can:
 Improve quality: Automation controls the schedules and production lines
without human interference. The program can optimize the schedule to reduce
defects and inefficiencies, creating better-quality products.
 Reduce costs: Technology can operate with better efficiency, less waste, and
fewer workers, creating long-term cost savings.
 Decrease production time: Manufacturing technology expedites the production
process, so more batches can be made more quickly. You can create more
products in less time and have a consistent run rate.
 Optimize the supply chain: The entire supply chain benefits from procurement
and production that follows the delivery schedule.
 Have more consistent results: Automated technology is more consistent and
eliminates the mistakes error-prone humans are more likely to create.
 Foster a safer workplace: Machines can do jobs that are dangerous for workers,
preventing injury and risk. Technology can also identify risks and develop
safety measures.

Q What are the various functions of operations? How are they linked to other
parts of an organization?
The functions of operations management can be divided into four main categories:
 Production planning and control
 Finance
 Product Design
 Inventory management
 Quality control
  Forecasting
 Supple Chain Management
 Operational Strategy

Q What do you mean by regression and correlation analysis explain in brief?
Correlation is used to determine the relationship between data sets in business and is
widely used in financial analysis and to support decision making. Regression analysis
not only refers to the relationship between data sets but also that if one data set
changes, it will cause a corresponding change in the other data set. Regression
analysis is often used in sales forecasting, product, and service development,
predicting future market trends, and other use cases. Correlation and regression
analysis aids business leaders in making more impactful predictions based on patterns
in data. This technique can help guide business processes, direction, and performance
accordingly, resulting in improved management, better customer experience strategies,
and optimized operations.
Correlation analysis is a form of statistics that helps to determine the relationship
between two variables where a high correlation indicates a strong relationship, and a
weak correlation indicates that they are not closely related.
Regression analysis is also used to determine which variables have a specific impact. A
dependent variable is the main point you are trying to understand more about, and the
independent variable is the elements that might have an effect on the dependent
variable.
Q Write down the functions of master production schedule?
Main Functions of Master Production Scheduling
These functions include the following:
 Translating Plans - This portion of master production scheduling determines
the level of operations that balance market demand with material, labor, and
equipment capabilities. This is because the master schedule translates the plan
into a specific number of items that are needed to be produced within a given
time.
 Evaluating Alternative Schedules - The master schedule produces trial and error
schedules that give production alternate routes to follow. This accounts for any
unexpected mishaps within production to be taken care off immediately.
 Produce Capacity Requirements - This software aids capacity planning through
establishing capacity requirements. Capacity requirements are directly received
through master production scheduling and therefore correlate with capacity
planning. This is an important component of planning and scheduling as
capacity constraints will affect the output of production.
  Facilitating Information Processing - The master schedule determines
whenever deliveries are needed to be made. This coordinates with various
management information systems such as marketing, finance, and others.
 Utilization of Capacity - Master production scheduling software establishes
load and utilization requirements for machines and equipment. This allows for
the absolute best capacity utilization and a much more efficient flow of
production.
Q What are the attributes to characterize a project organization?
The attributes that characterize a project include resources, uniqueness, conflict,
interdependencies, one-time occurrence, and finite duration
The main attributes of a project include:
 Specific Goals: The project should have clearly defined goals and objectives
that are specific, measurable, achievable, relevant and time-bound (SMART).
 Limited Resources: Projects are typically constrained by limited resources such
as time, money, and personnel.
 Interdependencies: Projects often have a complex set of interdependencies
between tasks, resources, and stakeholders.
 Uncertainty: Projects are often undertaken in environments of uncertainty and
change, and there may be a high degree of risk involved.
 Unique: Each project is unique and requires a different approach and set of
activities to achieve its goals.
 Organizational Impact: Projects can have a significant impact on an
organization and its stakeholders, and they are often used to achieve strategic
goals and objectives.
 Time-bound: Projects have a defined start and end date and are usually
constrained by time.
 Deliverable: Projects usually have an end deliverable, which is a tangible
outcome or product of the project.
 Stakeholder: Projects have stakeholders that are impacted by the project and
may have a vested interest in its outcome.

Q Define the term 'Backordering'. Write its significance?

A backorder is an order for a good or service that cannot be filled at the current time
due to a lack of available supply. The item may not be held in the company's available
inventory but could still be in production, or the company may need to still
manufacture more of the product. Backorders are an indication that demand for a
company's product outweighs its supply. They may also be known as the company's
backlog.
KEY TAKEAWAYS
  A backorder is an order for a good or service that cannot be filled immediately
because of a lack of available supply.
 Backorders give insight into a company's inventory management. A manageable
backorder with a short turnaround is a net positive, but a large backorder with
longer wait times can be problematic.
 Companies with manageable backorders tend to have high demand, while those
that can't keep up may lose customers.
 However, backorders allow for a company to maintain lower levels of
inventory, have lower risk of obsolesce and theft, and may result in natural
marketing for its highly demanded product.
 Popular products in high demand (i.e. next generation gaming consoles or new
iterations of cell phones) may experience backorders.
Backordering increases sales for your business and prevents your customers from
going to your competitors. It also offers a few other essential benefits:
Customization
Since backordering involves passing the customer’s order along to your supplier, it’s
easy to accommodate custom requests. For example, Harley Davidson allows its
customers in the UK an option to build their own motorcycles. By using backordering
instead of a standing inventory, the company has turned a convenient business
decision into an appealing selling point for its customers.
Reduced costs
Backordering reduces the problem of overstocking products, which in turn reduces
warehousing costs. For retailers that are just starting out, it makes it possible to spend
less on starting inventory. It also frees up capital that would otherwise be tied up in
stock and holding costs. For Example: Tesla, prefers to keep their inventory less and
produce on demand, thereby reducing the amount of capital and risk tied up with
excess inventory storage.
Less waste
Backordering reduces wasted inventory, because the faster turnaround means goods
have less time to become damaged or obsolete. For example, if you’re a retailer who
sells air conditioners, you get a surge in demand every summer. But once winter hits,
the demand plummets. You don’t want to be left with unsold units over the winter,
because they might be damaged by weather or be upstaged by newer models next
summer. By using backordering, you can meet the summer demand with less risk.
Increased product and brand value
Some technology-intensive companies use backordering as a marketing gimmick, to
increase the value of the product in the eyes of the customer. For example, the
Samsung Galaxy S10 5G, which is one of the first phones to offer 5G support, is on
backorder in the UK before its launch. The high number of backorders, indicate that
the strategy helps to increase customers’ curiosity and desire to buy.
Q What are the steps involved in value analysis, Explain in detail?
Value analysis is a set of techniques, knowledge, and skills used to improve the value
of a product by eliminating unnecessary costs or improving its functions without
compromising its quality, reliability, and performance. It involves understanding the
components of a product and related costs.
5 Value Analysis Steps
(i) Gather information. During this step, the main aim of your team is to
understand the purpose of a project. Team members collect project data and
concepts and try to understand the project scope. They analyze budget, risks,
costs, and other issues, visit sites, and study various project documents.
(ii) Determine and analyze the function of a project. First of all, your team
identifies the primary and secondary functions of the project. Next, team
members should determine value-mismatched functions to improve them.
(iii) Generate new ideas for improvement. This step is for team members to
create and develop improvement ideas. They should find alternatives so that
the project could perform the same functions.
(iv) Evaluate these ideas and develop them. Team members discuss each idea in
detail and identify the costs. They review all the possible risks and choose
the most relevant and suitable ideas. Once ideas that make sense are
identified, it’s time to work with them. Your value engineering team
develops the options and passes them back to the project team. These ideas
should be thoroughly explained so that project owners and stakeholders can
understand them.
(v) Present improvements. At this stage, the ideas are presented to stakeholders.
The best salesperson is responsible for the presentation.

Q Write about cycle graph and chronocyclegraph?

Cycle graph and Chrono cycle graph
These are the photographic techniques for the study of path of movements of an
operators hands, fingers etc. these are used especially for those movements which are
too fast to be traced by human eye.
A cycle graph is a record off path of movements usually traced by a continuous source
of light on a photograph. A small electric bulb is attached to hand, finger or other part
of the body of the operator performing the operation.
A photograph is taken by still camera and the light source shows the path of the motion
and the path of photograph is called “cycle graph”.
Chronocycle Graph:
Cycle graph has a limitation. It will not give the direction or the speed of movements.
This limitation is overcome by Chronocycle graph.

The Chronocycle graph is special form of cycle graph in which the light source is
suitably interrupted so that the path appears as a series of pear-shaped dots the pointed
end indicating the direction of movement and the spacing indicating the speed of
movement.
The time taken for the movement can be determined by knowing the rate at which the
light source is being interrupted and by counting the number of dots.

Q Discuss the objectives of Operation Management and the activities performed

by Operation Manager.
What are the objective of operation management?
1. Right Quality: Quality is a degree to which it conforms the design specification and
satisfies the
consumer in general. Right quality must lead to effectiveness of production process.
2. Right Quantity: The manufacturing organization should produce the products in
right number. If they are produced in excess of
demand, the capital will block up in the form of
inventory, and if produced in short of demand, it
leads to the shortage of products. Quantity
produced always shows a measure of efficiency of
production process.
3. Right Time: Right time delivery in one of the
important parameter to judge the effectiveness of
production department. Product and services should reach the consumer in time. If
timeliness are not followed, then the product may be considered as waste, hence right
time production leads to accuracy.
4. Right Manufacturing: In the era of competition, manufacturing costs play a very
important role in the success of the organisation. An organisation cannot increase the
sales price outright, nor can it
reduce its profit margin. The only way to survive is either to reduce manufacturing
cost or
maintain it at the same level. Hence, right manufacturing costs lead to profitability.
5. Right Place: Delivery locations and manufacturing locations are very important.
Manufacturing and
delivering the goods at right place is very imporatn. It can be taken as a key factor for
success. Delivering the goods at right place ensures the perfectness of the production
process.
6. Right Information: In the era of information technology, collecting and providing
right information is the key to success for any business. Passing the information from
right source to right receiver
completes the fitness of information cycle.
Operations managers' responsibilities include:
 Human resource management – the people employed by an organisation either
work directly to create a good or service or provide support to those who do.
People and the way they are managed are a key resource of all organisations.
 Asset management – an organisation's buildings, facilities, equipment and stock
are directly involved in or support the operations function.
 Cost management – most of the costs of producing goods or services are
directly related to the costs of acquiring resources, transforming them or
delivering them to customers. For many organisations in the private sector,
driving down costs through efficient operations management gives them a
critical competitive edge. For organisations in the not-for-profit sector, the
ability to manage costs is no less important.
Q What is Economic Analysis? Discuss the source of Industrial Finance and
Capital Budgeting.
Economic analysis refers to evaluating costs and benefits to check the viability of a
project, investment opportunity, event, or any other matter. In other words, it involves
identifying, evaluating, and comparing costs and benefits. In addition, there are many
other significant concepts involved.
Key Takeaways
 The economic analysis defines assessing the cost-benefit scenario of a project,
event, or action. It helps organizations understand the opportunity cost.
 There are different economic analysis tools that economists and business
owners employ to find the appropriateness of the plan or selection.
 Businesses pursue any project or financial activity only after applying economic
analysis to restrict potential hazards. Economic variables, slopes, optimization,
and linear programming are some tools or concepts involved.
 It also contributes to explaining the economic growth of a country and how a
business operates and establishes inside it.